Lannett Announces Fiscal 2020 First-Quarter Financial Results

Published

PHILADELPHIA, Nov. 6, 2019 /PRNewswire/ --   

Financial and Business Highlights:

  • Net Sales, Profitability Exceeded Expectations
  • Launched First-to-Market Posaconazole
  • Expanded Pipeline with Significant Future Opportunities:      Levothyroxine (Approved)      Generic ADVAIR DISKUS®
  • Successfully Completed $86.25 Million Convertible Notes Offering

Lannett Company, Inc. (NYSE: LCI) today reported financial results for its fiscal 2020 first quarter ended September 30, 2019. 

"Our topline and bottom-line for the fiscal 2020 first quarter exceeded our expectations, largely due to strong sales of certain key products and the launch of Posaconazole late in the period," said Tim Crew, chief executive officer of Lannett.  "We continue to build our business and expand our opportunities for ongoing growth.  In the current quarter, we are now launching our third new product and plan to launch several more over the next several months.  In addition, we secured exclusive U.S. commercialization rights to an approved ANDA for Levothyroxine Sodium Tablets, as well as an advanced development program for generic ADVAIR DISKUS®, a drug used to treat symptoms associated with asthma and other respiratory diseases.  Both medications are potentially large market opportunities.

"Near the end of the first quarter, we completed an $86.25 million convertible notes offering, due 2026, and used the net proceeds to pay down half of our outstanding Term A Loans.  Our existing cash position exceeds the remaining balance of the Term A Loans, which mature in about one year.  As a result of the transaction, we lowered our interest expense, strengthened our balance sheet and improved our financial flexibility."

For the fiscal 2020 first quarter, on a GAAP basis, net sales were $127.3 million compared with $155.1 million for the first quarter of fiscal 2019.  Gross profit was $42.7 million, or 33% of total net sales, compared with $59.1 million, or 38% of total net sales.  Net loss was $12.2 million, or $0.32 per share.  Net loss for the prior year first quarter, which included asset impairment charges of $369.5 million, was $287.5 million, or $7.65 per share.

For the fiscal 2020 first quarter reported on a Non-GAAP basis, net sales were $127.3 million compared with $155.1 million for the first quarter of fiscal 2019.  Adjusted gross profit was $52.6 million, or 41% of adjusted net sales, compared with $68.7 million, or 44% of adjusted net sales, for the prior-year first quarter.  Adjusted interest expense was $15.3 million compared with $16.9 million for the first quarter of fiscal 2019.  Adjusted net income was $8.8 million, or $0.22 per diluted share, compared with $16.9 million, or $0.44 per diluted share, for the fiscal 2019 first quarter.

Guidance for Fiscal 2020As discussed above, the company expects interest and other expense for fiscal 2020 to be lower than previously estimated as a result of the convertible notes offering.  Based on its current outlook, the company revised certain items in its GAAP guidance and reiterated adjusted guidance for fiscal year 2020, except for interest and other.  The full guidance is as follows:

GAAP Adjusted**
Net sales $525 million to $545 million, unchanged $525 million to $545 million, unchanged
Gross margin % Approximately 33.5% to 35.5%, unchanged Approximately 40% to 42%, unchanged
R&D expense $34 million to $36 million, unchanged $34 million to $36 million, unchanged
SG&A expense $69 million to $72 million, up from $68 million to $71 million $63 million to $66 million, unchanged
Restructuring expense $2 million to $4 million, unchanged $ --
Asset impairment charges $2 million $ --
Interest and other $70 million to $72 million, down from $71 million to $73 million $54 million to $56 million, down from $56 million to $58 million
Effective tax rate Approximately 16% to 17%, down from approximately 26% to 29% Approximately 22% to 23%, unchanged
Adjusted EBITDA* N/A $145 million to $160 million, unchanged
Capital expenditures $20 million to $25 million, unchanged $20 million to $25 million, unchanged

GAAP Adjusted**
Net sales $525 million to $545 million, unchanged $525 million to $545 million, unchanged **A reconciliation of Adjusted amounts to most directly comparable GAAP amounts can be found in the attached financial tables.
Gross margin % Approximately 33.5% to 35.5%, unchanged Approximately 40% to 42%, unchanged
R&D expense $34 million to $36 million, unchanged $34 million to $36 million, unchanged
SG&A expense $69 million to $72 million, up from $68 million to $71 million $63 million to $66 million, unchanged
Restructuring expense $2 million to $4 million, unchanged $ --
Asset impairment charges $2 million $ --
Interest and other $70 million to $72 million, down from $71 million to $73 million $54 million to $56 million, down from $56 million to $58 million
Effective tax rate Approximately 16% to 17%, down from approximately 26% to 29% Approximately 22% to 23%, unchanged
Adjusted EBITDA* N/A $145 million to $160 million, unchanged
Capital expenditures $20 million to $25 million, unchanged $20 million to $25 million, unchanged

Conference Call Information and Forward-Looking StatementsLater today, the company will host a conference call at 4:30 p.m. ET to review its results of operations for its fiscal 2020 first quarter ended September 30, 2019.  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 49151826.  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 MeasuresThis news release contains references to Non-GAAP financial measures, including Adjusted EBITDA, 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.  The company also believes that including Adjusted EBITDA, as defined in the company's existing Credit Agreement, is appropriate to provide additional information to investors to demonstrate the company's ability to comply with financial debt covenants.  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) restructuring expenses, (3) non-cash interest expense, as well as (4) certain other items considered unusual or non-recurring in nature. 

*Adjusted EBITDA excludes the same adjustments discussed above, as well as additional adjustments permitted under the company's existing Credit Agreement.

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 commercializing recently launched products and planned product launches, and achieving the financial metrics stated in the company's guidance for fiscal 2020, 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.

GAAP Adjusted** Contact: Robert Jaffe
Net sales $525 million to $545 million, unchanged $525 million to $545 million, unchanged **A reconciliation of Adjusted amounts to most directly comparable GAAP amounts can be found in the attached financial tables. Robert Jaffe Co., LLC
Gross margin % Approximately 33.5% to 35.5%, unchanged Approximately 40% to 42%, unchanged (424) 288-4098
R&D expense $34 million to $36 million, unchanged $34 million to $36 million, unchanged
SG&A expense $69 million to $72 million, up from $68 million to $71 million $63 million to $66 million, unchanged
Restructuring expense $2 million to $4 million, unchanged $ --
Asset impairment charges $2 million $ --
Interest and other $70 million to $72 million, down from $71 million to $73 million $54 million to $56 million, down from $56 million to $58 million
Effective tax rate Approximately 16% to 17%, down from approximately 26% to 29% Approximately 22% to 23%, unchanged
Adjusted EBITDA* N/A $145 million to $160 million, unchanged
Capital expenditures $20 million to $25 million, unchanged $20 million to $25 million, unchanged

FINANCIAL SCHEDULES FOLLOW

GAAP Adjusted** Contact: Robert Jaffe LANNETT COMPANY, INC.
Net sales $525 million to $545 million, unchanged $525 million to $545 million, unchanged **A reconciliation of Adjusted amounts to most directly comparable GAAP amounts can be found in the attached financial tables. Robert Jaffe Co., LLC CONSOLIDATED BALANCE SHEETS
Gross margin % Approximately 33.5% to 35.5%, unchanged Approximately 40% to 42%, unchanged (424) 288-4098 (In thousands, except share and per share data)
R&D expense $34 million to $36 million, unchanged $34 million to $36 million, unchanged
SG&A expense $69 million to $72 million, up from $68 million to $71 million $63 million to $66 million, unchanged
Restructuring expense $2 million to $4 million, unchanged $ --
Asset impairment charges $2 million $ -- ASSETS
Interest and other $70 million to $72 million, down from $71 million to $73 million $54 million to $56 million, down from $56 million to $58 million Current assets: September 30, 2019 June 30, 2019
Effective tax rate Approximately 16% to 17%, down from approximately 26% to 29% Approximately 22% to 23%, unchanged Cash and cash equivalents $                     101,008 $       140,249
Adjusted EBITDA* N/A $145 million to $160 million, unchanged Accounts receivable, net 173,109 164,752
Capital expenditures $20 million to $25 million, unchanged $20 million to $25 million, unchanged Inventories 149,162 143,971
Prepaid income taxes 159 -
Assets held for sale 4,637 9,671
Other current assets 6,994 13,606
Total current assets 435,069 472,249
Property, plant and equipment, net 184,889 186,670
Intangible assets, net 427,253 411,229
Goodwill - -
Operating lease assets 6,410 -
Deferred tax assets 110,396 109,305
Other assets 7,914 7,960
TOTAL ASSETS $                  1,171,931 $    1,187,413
LIABILITIES
Current liabilities:
Accounts payable $                       26,927 $         13,493
Accrued expenses 6,233 5,805
Accrued payroll and payroll-related expenses 12,347 19,924
Rebates payable 43,358 46,175
Royalties payable 16,597 16,215
Restructuring liability 1,167 2,315
Other current liabilties 3,652 3,652
Income taxes payable - 2,198
Short-term borrowings and current portion of long-term debt 66,845 66,845
Current operating lease liabilities 1,932 -
Total current liabilities 179,058 176,622
Long-term debt, net 654,432 662,203
Long-term operating lease liabilities 5,626 -
Other liabilities 14,711 14,547
TOTAL LIABILITIES 853,827 853,372
STOCKHOLDERS' EQUITY
Common stock ($0.001 par value, 100,000,000 shares authorized; 39,629,271  and 38,969,518 shares issued; 38,526,558 and 38,010,714 shares outstanding at September 30, 2019 and June 30, 2019, respectively) 40 39
Additional paid-in capital 314,645 317,023
Retained earnings 19,918 32,075
Accumulated other comprehensive loss (661) (615)
Treasury stock(1,102,713 and 958,804 shares at September 30, 2019 and June 30, 2019, respectively) (15,838) (14,481)
Total stockholders' equity 318,104 334,041
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $                  1,171,931 $    1,187,413

 

GAAP Adjusted** Contact: Robert Jaffe LANNETT COMPANY, INC. LANNETT COMPANY, INC.
Net sales $525 million to $545 million, unchanged $525 million to $545 million, unchanged **A reconciliation of Adjusted amounts to most directly comparable GAAP amounts can be found in the attached financial tables. Robert Jaffe Co., LLC CONSOLIDATED BALANCE SHEETS CONSOLIDATED STATEMENTS OF OPERATIONS
Gross margin % Approximately 33.5% to 35.5%, unchanged Approximately 40% to 42%, unchanged (424) 288-4098 (In thousands, except share and per share data) (In thousands, except share and per share data)
R&D expense $34 million to $36 million, unchanged $34 million to $36 million, unchanged
SG&A expense $69 million to $72 million, up from $68 million to $71 million $63 million to $66 million, unchanged  (UNAUDITED)
Restructuring expense $2 million to $4 million, unchanged $ -- Three months ended 
Asset impairment charges $2 million $ -- ASSETS September 30,
Interest and other $70 million to $72 million, down from $71 million to $73 million $54 million to $56 million, down from $56 million to $58 million Current assets: September 30, 2019 June 30, 2019 2019 2018
Effective tax rate Approximately 16% to 17%, down from approximately 26% to 29% Approximately 22% to 23%, unchanged Cash and cash equivalents $                     101,008 $       140,249
Adjusted EBITDA* N/A $145 million to $160 million, unchanged Accounts receivable, net 173,109 164,752 Net sales $      127,342 $        155,054
Capital expenditures $20 million to $25 million, unchanged $20 million to $25 million, unchanged Inventories 149,162 143,971 Cost of sales  77,656 87,690
Prepaid income taxes 159 - Amortization of intangibles 7,028 8,223
Assets held for sale 4,637 9,671 Gross profit 42,658 59,141
Other current assets 6,994 13,606 Operating expenses:
Total current assets 435,069 472,249 Research and development expenses 8,940 9,810
Property, plant and equipment, net 184,889 186,670 Selling, general, and administrative expenses 21,308 20,588
Intangible assets, net 427,253 411,229 Restructuring expenses 1,388 1,022
Goodwill - - Asset impairment charges 1,618 369,499
Operating lease assets 6,410 - Total operating expenses 33,254 400,919
Deferred tax assets 110,396 109,305 Operating income (loss) 9,404 (341,778)
Other assets 7,914 7,960 Other income (loss):
TOTAL ASSETS $                  1,171,931 $    1,187,413 Loss on extinguishment of debt (2,145) -
Investment income 729 379
Interest expense (19,292) (21,433)
LIABILITIES Other 934 (296)
Current liabilities: Total other loss (19,774) (21,350)
Accounts payable $                       26,927 $         13,493 Loss before income tax (10,370) (363,128)
Accrued expenses 6,233 5,805 Income tax expense (benefit) 1,787 (75,600)
Accrued payroll and payroll-related expenses 12,347 19,924 Net Loss $      (12,157) $      (287,528)
Rebates payable 43,358 46,175
Royalties payable 16,597 16,215 Loss per common share:
Restructuring liability 1,167 2,315      Basic $            (0.32) $            (7.65)
Other current liabilties 3,652 3,652      Diluted $            (0.32) $            (7.65)
Income taxes payable - 2,198
Short-term borrowings and current portion of long-term debt 66,845 66,845 Weighted average common shares outstanding:
Current operating lease liabilities 1,932 -      Basic 38,309,267 37,586,327
Total current liabilities 179,058 176,622      Diluted 38,309,267 37,586,327
Long-term debt, net 654,432 662,203
Long-term operating lease liabilities 5,626 -
Other liabilities 14,711 14,547
TOTAL LIABILITIES 853,827 853,372
STOCKHOLDERS' EQUITY
Common stock ($0.001 par value, 100,000,000 shares authorized; 39,629,271  and 38,969,518 shares issued; 38,526,558 and 38,010,714 shares outstanding at September 30, 2019 and June 30, 2019, respectively) 40 39
Additional paid-in capital 314,645 317,023
Retained earnings 19,918 32,075
Accumulated other comprehensive loss (661) (615)
Treasury stock(1,102,713 and 958,804 shares at September 30, 2019 and June 30, 2019, respectively) (15,838) (14,481)
Total stockholders' equity 318,104 334,041
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $                  1,171,931 $    1,187,413

 

GAAP Adjusted** Contact: Robert Jaffe LANNETT COMPANY, INC. LANNETT COMPANY, INC. LANNETT COMPANY, INC.
Net sales $525 million to $545 million, unchanged $525 million to $545 million, unchanged **A reconciliation of Adjusted amounts to most directly comparable GAAP amounts can be found in the attached financial tables. Robert Jaffe Co., LLC CONSOLIDATED BALANCE SHEETS CONSOLIDATED STATEMENTS OF OPERATIONS RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION (UNAUDITED)
Gross margin % Approximately 33.5% to 35.5%, unchanged Approximately 40% to 42%, unchanged (424) 288-4098 (In thousands, except share and per share data) (In thousands, except share and per share data) (In thousands, except percentages, share and per share data)
R&D expense $34 million to $36 million, unchanged $34 million to $36 million, unchanged
SG&A expense $69 million to $72 million, up from $68 million to $71 million $63 million to $66 million, unchanged  (UNAUDITED) Three months ended September 30, 2019
Restructuring expense $2 million to $4 million, unchanged $ -- Three months ended  Net sales Cost of sales Amortization of intangibles Gross Profit Gross Margin % R&D expense SG&A expense Restructuring expenses Asset impairment charges Operating income Other income (loss) Income (loss) before income tax Income tax expense Net income (loss) Diluted earnings (loss) per share (k)
Asset impairment charges $2 million $ -- ASSETS September 30, GAAP Reported $ 127,342 $ 77,656 $        7,028 $ 42,658 33% $ 8,940 $ 21,308 $        1,388 1,618 $    9,404 $(19,774) $       (10,370) $ 1,787 $(12,157) $   (0.32)
Interest and other $70 million to $72 million, down from $71 million to $73 million $54 million to $56 million, down from $56 million to $58 million Current assets: September 30, 2019 June 30, 2019 2019 2018 Adjustments:
Effective tax rate Approximately 16% to 17%, down from approximately 26% to 29% Approximately 22% to 23%, unchanged Cash and cash equivalents $                     101,008 $       140,249 Amortization of intangibles (a) - - (7,028) 7,028 - - - - 7,028 - 7,028 - 7,028
Adjusted EBITDA* N/A $145 million to $160 million, unchanged Accounts receivable, net 173,109 164,752 Net sales $      127,342 $        155,054 Cody API business (b) - (1,722) - 1,722 (420) (214) - - 2,356 - 2,356 - 2,356
Capital expenditures $20 million to $25 million, unchanged $20 million to $25 million, unchanged Inventories 149,162 143,971 Cost of sales  77,656 87,690 Depreciation on capitalized software costs (c) - - - - - (1,058) - - 1,058 - 1,058 - 1,058
Prepaid income taxes 159 - Amortization of intangibles 7,028 8,223 Decommissioning of Philadelphia sites (d) - (989) - 989 - - - - 989 - 989 - 989
Assets held for sale 4,637 9,671 Gross profit 42,658 59,141 Restructuring expenses (e) - - - - - - (1,388) - 1,388 - 1,388 - 1,388
Other current assets 6,994 13,606 Operating expenses: Asset impairment charges (f) - - - - - - - (1,618) 1,618 - 1,618 - 1,618
Total current assets 435,069 472,249 Research and development expenses 8,940 9,810 Non-cash interest (g) - - - - - - - - - 4,008 4,008 - 4,008
Property, plant and equipment, net 184,889 186,670 Selling, general, and administrative expenses 21,308 20,588 Loss on extinguishment of debt (h) - - - - - - - - - 2,145 2,145 - 2,145
Intangible assets, net 427,253 411,229 Restructuring expenses 1,388 1,022 Other (i) - (208) - 208 - (2,090) - - 2,298 (966) 1,332 - 1,332
Goodwill - - Asset impairment charges 1,618 369,499 Tax adjustments (j) - - - - - - - - - - - 999 (999)
Operating lease assets 6,410 - Total operating expenses 33,254 400,919
Deferred tax assets 110,396 109,305 Operating income (loss) 9,404 (341,778) Non-GAAP Adjusted $   127,342 $  74,737 $              - $  52,605 41% $  8,520 $  17,946 $              - $           - $    26,139 $  (14,587) $           11,552 $  2,786 $     8,766 $      0.22
Other assets 7,914 7,960 Other income (loss):
TOTAL ASSETS $                  1,171,931 $    1,187,413 Loss on extinguishment of debt (2,145) - (a)  To exclude amortization of purchased intangible assets primarily related to the acquisitions of KUPI and Silarx Pharmaceuticals, Inc. 
Investment income 729 379 (b)  To exclude the operating results of the ceased Cody API business 
Interest expense (19,292) (21,433) (c)  To exclude depreciation on previously capitalized software integration costs associated with the KUPI acquisition 
LIABILITIES Other 934 (296) (d)  To exclude the costs related to the decommissioning and shutdown of the Philadelphia manufacturing and distribution sites 
Current liabilities: Total other loss (19,774) (21,350) (e)  To exclude expenses associated with the Cody API Restructuring Plan 
Accounts payable $                       26,927 $         13,493 Loss before income tax (10,370) (363,128) (f)  To exclude impairment charges primarily associated with an operating lease right-of-use asset 
Accrued expenses 6,233 5,805 Income tax expense (benefit) 1,787 (75,600) (g)  To exclude non-cash interest expense associated with debt issuance costs 
Accrued payroll and payroll-related expenses 12,347 19,924 Net Loss $      (12,157) $      (287,528) (h)  To exclude the loss on extinguishment of debt primarily related to the partial repayment of outstanding Term Loan A balance 
Rebates payable 43,358 46,175 (i)  To primarily exclude accrued separation costs related to the Company's former Chief Financial Officer as well as gains on sales of assets previously held for sale 
Royalties payable 16,597 16,215 Loss per common share: (j)  To exclude the tax effect of the pre-tax adjustments included above at applicable tax rates 
Restructuring liability 1,167 2,315      Basic $            (0.32) $            (7.65) (k) The weighted average share number for the three months ended September 30, 2019 is 38,309,267 for GAAP and 40,653,053 for the non-GAAP earnings (loss) per share calculations. As a result of the 4.5% Senior Convertible Note issued on September 27, 2019, the diluted earnings per share was calculated based on the "if-converted" method.
Other current liabilties 3,652 3,652      Diluted $            (0.32) $            (7.65)
Income taxes payable - 2,198
Short-term borrowings and current portion of long-term debt 66,845 66,845 Weighted average common shares outstanding:
Current operating lease liabilities 1,932 -      Basic 38,309,267 37,586,327
Total current liabilities 179,058 176,622      Diluted 38,309,267 37,586,327
Long-term debt, net 654,432 662,203
Long-term operating lease liabilities 5,626 -
Other liabilities 14,711 14,547
TOTAL LIABILITIES 853,827 853,372
STOCKHOLDERS' EQUITY
Common stock ($0.001 par value, 100,000,000 shares authorized; 39,629,271  and 38,969,518 shares issued; 38,526,558 and 38,010,714 shares outstanding at September 30, 2019 and June 30, 2019, respectively) 40 39
Additional paid-in capital 314,645 317,023
Retained earnings 19,918 32,075
Accumulated other comprehensive loss (661) (615)
Treasury stock(1,102,713 and 958,804 shares at September 30, 2019 and June 30, 2019, respectively) (15,838) (14,481)
Total stockholders' equity 318,104 334,041
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $                  1,171,931 $    1,187,413

 

GAAP Adjusted** Contact: Robert Jaffe LANNETT COMPANY, INC. LANNETT COMPANY, INC. LANNETT COMPANY, INC. LANNETT COMPANY, INC.
Net sales $525 million to $545 million, unchanged $525 million to $545 million, unchanged **A reconciliation of Adjusted amounts to most directly comparable GAAP amounts can be found in the attached financial tables. Robert Jaffe Co., LLC CONSOLIDATED BALANCE SHEETS CONSOLIDATED STATEMENTS OF OPERATIONS RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION (UNAUDITED) RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION (UNAUDITED)
Gross margin % Approximately 33.5% to 35.5%, unchanged Approximately 40% to 42%, unchanged (424) 288-4098 (In thousands, except share and per share data) (In thousands, except share and per share data) (In thousands, except percentages, share and per share data) (In thousands, except percentages, share and per share data)
R&D expense $34 million to $36 million, unchanged $34 million to $36 million, unchanged
SG&A expense $69 million to $72 million, up from $68 million to $71 million $63 million to $66 million, unchanged  (UNAUDITED) Three months ended September 30, 2019 Three months ended September 30, 2018
Restructuring expense $2 million to $4 million, unchanged $ -- Three months ended  Net sales Cost of sales Amortization of intangibles Gross Profit Gross Margin % R&D expense SG&A expense Restructuring expenses Asset impairment charges Operating income Other income (loss) Income (loss) before income tax Income tax expense Net income (loss) Diluted earnings (loss) per share (k) Net sales Cost of sales Amortization of intangibles Gross Profit Gross Margin % R&D expense SG&A expense Restructuring expenses Asset impairment charges Operating income (loss) Other income (loss) Income (loss) before income tax Income tax expense (benefit) Net income (loss) Diluted earnings (loss) per share (h)
Asset impairment charges $2 million $ -- ASSETS September 30, GAAP Reported $ 127,342 $ 77,656 $        7,028 $ 42,658 33% $ 8,940 $ 21,308 $        1,388 1,618 $    9,404 $(19,774) $       (10,370) $ 1,787 $(12,157) $   (0.32) GAAP Reported $ 155,054 $ 87,690 $      8,223 $ 59,141 38% $ 9,810 $ 20,588 $        1,022 369,499 $(341,778) $(21,350) $     (363,128) $(75,600) $ (287,528) $   (7.65)
Interest and other $70 million to $72 million, down from $71 million to $73 million $54 million to $56 million, down from $56 million to $58 million Current assets: September 30, 2019 June 30, 2019 2019 2018 Adjustments: Adjustments:
Effective tax rate Approximately 16% to 17%, down from approximately 26% to 29% Approximately 22% to 23%, unchanged Cash and cash equivalents $                     101,008 $       140,249 Amortization of intangibles (a) - - (7,028) 7,028 - - - - 7,028 - 7,028 - 7,028 Depreciation of Fixed Assets step-up (a) - (1,335) - 1,335 - - - - 1,335 - 1,335 - 1,335
Adjusted EBITDA* N/A $145 million to $160 million, unchanged Accounts receivable, net 173,109 164,752 Net sales $      127,342 $        155,054 Cody API business (b) - (1,722) - 1,722 (420) (214) - - 2,356 - 2,356 - 2,356 Amortization of intangibles (b) - - (8,223) 8,223 - - - - 8,223 - 8,223 - 8,223
Capital expenditures $20 million to $25 million, unchanged $20 million to $25 million, unchanged Inventories 149,162 143,971 Cost of sales  77,656 87,690 Depreciation on capitalized software costs (c) - - - - - (1,058) - - 1,058 - 1,058 - 1,058 Restructuring expenses (c) - - - - - - (1,022) - 1,022 - 1,022 - 1,022
Prepaid income taxes 159 - Amortization of intangibles 7,028 8,223 Decommissioning of Philadelphia sites (d) - (989) - 989 - - - - 989 - 989 - 989 Asset impairment charges (d) - - - - - - - (369,499) 369,499 369,499 - 369,499
Assets held for sale 4,637 9,671 Gross profit 42,658 59,141 Restructuring expenses (e) - - - - - - (1,388) - 1,388 - 1,388 - 1,388 Non-cash interest (e) - - - - - - - - - 4,538 4,538 - 4,538
Other current assets 6,994 13,606 Operating expenses: Asset impairment charges (f) - - - - - - - (1,618) 1,618 - 1,618 - 1,618 Other (f) - - - - - (1,340) - - 1,340 - 1,340 - 1,340
Total current assets 435,069 472,249 Research and development expenses 8,940 9,810 Non-cash interest (g) - - - - - - - - - 4,008 4,008 - 4,008 Tax adjustments (g) - - - - - - - - - - - 81,504 (81,504)
Property, plant and equipment, net 184,889 186,670 Selling, general, and administrative expenses 21,308 20,588 Loss on extinguishment of debt (h) - - - - - - - - - 2,145 2,145 - 2,145
Intangible assets, net 427,253 411,229 Restructuring expenses 1,388 1,022 Other (i) - (208) - 208 - (2,090) - - 2,298 (966) 1,332 - 1,332 Non-GAAP Adjusted $   155,054 $  86,355 $            - $  68,699 44% $  9,810 $  19,248 $              - $           - $      39,641 $  (16,812) $           22,829 $     5,904 $      16,925 $      0.44
Goodwill - - Asset impairment charges 1,618 369,499 Tax adjustments (j) - - - - - - - - - - - 999 (999)
Operating lease assets 6,410 - Total operating expenses 33,254 400,919 (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") 
Deferred tax assets 110,396 109,305 Operating income (loss) 9,404 (341,778) Non-GAAP Adjusted $   127,342 $  74,737 $              - $  52,605 41% $  8,520 $  17,946 $              - $           - $    26,139 $  (14,587) $           11,552 $  2,786 $     8,766 $      0.22 (b)  Relates to amortization of purchased intangible assets primarily related to the acquisitions of KUPI and Silarx Pharmaceuticals, Inc. 
Other assets 7,914 7,960 Other income (loss): (c)  To exclude expenses associated with the 2016 Restructuring Plan and, to a lesser extent, the Cody Restructuring Plan 
TOTAL ASSETS $                  1,171,931 $    1,187,413 Loss on extinguishment of debt (2,145) - (a)  To exclude amortization of purchased intangible assets primarily related to the acquisitions of KUPI and Silarx Pharmaceuticals, Inc.  (d)  To exclude asset impairment charges related to goodwill and other long-lived assets 
Investment income 729 379 (b)  To exclude the operating results of the ceased Cody API business  (e)  To exclude non-cash interest expense associated with debt issuance costs 
Interest expense (19,292) (21,433) (c)  To exclude depreciation on previously capitalized software integration costs associated with the KUPI acquisition  (f)  To primarily exclude depreciation on previously capitalized software integration costs associated with the KUPI acquisition 
LIABILITIES Other 934 (296) (d)  To exclude the costs related to the decommissioning and shutdown of the Philadelphia manufacturing and distribution sites  (g)  The tax effect of the pre-tax adjustments included at applicable tax rates 
Current liabilities: Total other loss (19,774) (21,350) (e)  To exclude expenses associated with the Cody API Restructuring Plan  (h)  The weighted average share number for the three months ended September 30, 2018 is 37,586,327 for GAAP and 38,752,010 for the non-GAAP earnings (loss) per share calculations 
Accounts payable $                       26,927 $         13,493 Loss before income tax (10,370) (363,128) (f)  To exclude impairment charges primarily associated with an operating lease right-of-use asset 
Accrued expenses 6,233 5,805 Income tax expense (benefit) 1,787 (75,600) (g)  To exclude non-cash interest expense associated with debt issuance costs 
Accrued payroll and payroll-related expenses 12,347 19,924 Net Loss $      (12,157) $      (287,528) (h)  To exclude the loss on extinguishment of debt primarily related to the partial repayment of outstanding Term Loan A balance 
Rebates payable 43,358 46,175 (i)  To primarily exclude accrued separation costs related to the Company's former Chief Financial Officer as well as gains on sales of assets previously held for sale 
Royalties payable 16,597 16,215 Loss per common share: (j)  To exclude the tax effect of the pre-tax adjustments included above at applicable tax rates 
Restructuring liability 1,167 2,315      Basic $            (0.32) $            (7.65) (k) The weighted average share number for the three months ended September 30, 2019 is 38,309,267 for GAAP and 40,653,053 for the non-GAAP earnings (loss) per share calculations. As a result of the 4.5% Senior Convertible Note issued on September 27, 2019, the diluted earnings per share was calculated based on the "if-converted" method.
Other current liabilties 3,652 3,652      Diluted $            (0.32) $            (7.65)
Income taxes payable - 2,198
Short-term borrowings and current portion of long-term debt 66,845 66,845 Weighted average common shares outstanding:
Current operating lease liabilities 1,932 -      Basic 38,309,267 37,586,327
Total current liabilities 179,058 176,622      Diluted 38,309,267 37,586,327
Long-term debt, net 654,432 662,203
Long-term operating lease liabilities 5,626 -
Other liabilities 14,711 14,547
TOTAL LIABILITIES 853,827 853,372
STOCKHOLDERS' EQUITY
Common stock ($0.001 par value, 100,000,000 shares authorized; 39,629,271  and 38,969,518 shares issued; 38,526,558 and 38,010,714 shares outstanding at September 30, 2019 and June 30, 2019, respectively) 40 39
Additional paid-in capital 314,645 317,023
Retained earnings 19,918 32,075
Accumulated other comprehensive loss (661) (615)
Treasury stock(1,102,713 and 958,804 shares at September 30, 2019 and June 30, 2019, respectively) (15,838) (14,481)
Total stockholders' equity 318,104 334,041
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $                  1,171,931 $    1,187,413

 

GAAP Adjusted** Contact: Robert Jaffe LANNETT COMPANY, INC. LANNETT COMPANY, INC. LANNETT COMPANY, INC. LANNETT COMPANY, INC. LANNETT COMPANY, INC.
Net sales $525 million to $545 million, unchanged $525 million to $545 million, unchanged **A reconciliation of Adjusted amounts to most directly comparable GAAP amounts can be found in the attached financial tables. Robert Jaffe Co., LLC CONSOLIDATED BALANCE SHEETS CONSOLIDATED STATEMENTS OF OPERATIONS RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION (UNAUDITED) RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION (UNAUDITED) RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA (UNAUDITED)
Gross margin % Approximately 33.5% to 35.5%, unchanged Approximately 40% to 42%, unchanged (424) 288-4098 (In thousands, except share and per share data) (In thousands, except share and per share data) (In thousands, except percentages, share and per share data) (In thousands, except percentages, share and per share data) ($ in thousands)
R&D expense $34 million to $36 million, unchanged $34 million to $36 million, unchanged
SG&A expense $69 million to $72 million, up from $68 million to $71 million $63 million to $66 million, unchanged  (UNAUDITED) Three months ended September 30, 2019 Three months ended September 30, 2018 Three months ended 
Restructuring expense $2 million to $4 million, unchanged $ -- Three months ended  Net sales Cost of sales Amortization of intangibles Gross Profit Gross Margin % R&D expense SG&A expense Restructuring expenses Asset impairment charges Operating income Other income (loss) Income (loss) before income tax Income tax expense Net income (loss) Diluted earnings (loss) per share (k) Net sales Cost of sales Amortization of intangibles Gross Profit Gross Margin % R&D expense SG&A expense Restructuring expenses Asset impairment charges Operating income (loss) Other income (loss) Income (loss) before income tax Income tax expense (benefit) Net income (loss) Diluted earnings (loss) per share (h) September 30, 2019
Asset impairment charges $2 million $ -- ASSETS September 30, GAAP Reported $ 127,342 $ 77,656 $        7,028 $ 42,658 33% $ 8,940 $ 21,308 $        1,388 1,618 $    9,404 $(19,774) $       (10,370) $ 1,787 $(12,157) $   (0.32) GAAP Reported $ 155,054 $ 87,690 $      8,223 $ 59,141 38% $ 9,810 $ 20,588 $        1,022 369,499 $(341,778) $(21,350) $     (363,128) $(75,600) $ (287,528) $   (7.65)
Interest and other $70 million to $72 million, down from $71 million to $73 million $54 million to $56 million, down from $56 million to $58 million Current assets: September 30, 2019 June 30, 2019 2019 2018 Adjustments: Adjustments: Net loss $                       (12,157)
Effective tax rate Approximately 16% to 17%, down from approximately 26% to 29% Approximately 22% to 23%, unchanged Cash and cash equivalents $                     101,008 $       140,249 Amortization of intangibles (a) - - (7,028) 7,028 - - - - 7,028 - 7,028 - 7,028 Depreciation of Fixed Assets step-up (a) - (1,335) - 1,335 - - - - 1,335 - 1,335 - 1,335
Adjusted EBITDA* N/A $145 million to $160 million, unchanged Accounts receivable, net 173,109 164,752 Net sales $      127,342 $        155,054 Cody API business (b) - (1,722) - 1,722 (420) (214) - - 2,356 - 2,356 - 2,356 Amortization of intangibles (b) - - (8,223) 8,223 - - - - 8,223 - 8,223 - 8,223 Interest expense 19,292
Capital expenditures $20 million to $25 million, unchanged $20 million to $25 million, unchanged Inventories 149,162 143,971 Cost of sales  77,656 87,690 Depreciation on capitalized software costs (c) - - - - - (1,058) - - 1,058 - 1,058 - 1,058 Restructuring expenses (c) - - - - - - (1,022) - 1,022 - 1,022 - 1,022 Depreciation and amortization 12,789
Prepaid income taxes 159 - Amortization of intangibles 7,028 8,223 Decommissioning of Philadelphia sites (d) - (989) - 989 - - - - 989 - 989 - 989 Asset impairment charges (d) - - - - - - - (369,499) 369,499 369,499 - 369,499 Income tax expense 1,787
Assets held for sale 4,637 9,671 Gross profit 42,658 59,141 Restructuring expenses (e) - - - - - - (1,388) - 1,388 - 1,388 - 1,388 Non-cash interest (e) - - - - - - - - - 4,538 4,538 - 4,538 EBITDA 21,711
Other current assets 6,994 13,606 Operating expenses: Asset impairment charges (f) - - - - - - - (1,618) 1,618 - 1,618 - 1,618 Other (f) - - - - - (1,340) - - 1,340 - 1,340 - 1,340
Total current assets 435,069 472,249 Research and development expenses 8,940 9,810 Non-cash interest (g) - - - - - - - - - 4,008 4,008 - 4,008 Tax adjustments (g) - - - - - - - - - - - 81,504 (81,504) Share-based compensation 4,459
Property, plant and equipment, net 184,889 186,670 Selling, general, and administrative expenses 21,308 20,588 Loss on extinguishment of debt (h) - - - - - - - - - 2,145 2,145 - 2,145 Inventory write-down 3,510
Intangible assets, net 427,253 411,229 Restructuring expenses 1,388 1,022 Other (i) - (208) - 208 - (2,090) - - 2,298 (966) 1,332 - 1,332 Non-GAAP Adjusted $   155,054 $  86,355 $            - $  68,699 44% $  9,810 $  19,248 $              - $           - $      39,641 $  (16,812) $           22,829 $     5,904 $      16,925 $      0.44 Asset impairment charges 1,618
Goodwill - - Asset impairment charges 1,618 369,499 Tax adjustments (j) - - - - - - - - - - - 999 (999) Investment income (729)
Operating lease assets 6,410 - Total operating expenses 33,254 400,919 (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")  Loss on extinguishment of debt 2,145
Deferred tax assets 110,396 109,305 Operating income (loss) 9,404 (341,778) Non-GAAP Adjusted $   127,342 $  74,737 $              - $  52,605 41% $  8,520 $  17,946 $              - $           - $    26,139 $  (14,587) $           11,552 $  2,786 $     8,766 $      0.22 (b)  Relates to amortization of purchased intangible assets primarily related to the acquisitions of KUPI and Silarx Pharmaceuticals, Inc.  Other non-operating income (934)
Other assets 7,914 7,960 Other income (loss): (c)  To exclude expenses associated with the 2016 Restructuring Plan and, to a lesser extent, the Cody Restructuring Plan  Restructuring expenses 1,388
TOTAL ASSETS $                  1,171,931 $    1,187,413 Loss on extinguishment of debt (2,145) - (a)  To exclude amortization of purchased intangible assets primarily related to the acquisitions of KUPI and Silarx Pharmaceuticals, Inc.  (d)  To exclude asset impairment charges related to goodwill and other long-lived assets  Restructuring payments (2,536)
Investment income 729 379 (b)  To exclude the operating results of the ceased Cody API business  (e)  To exclude non-cash interest expense associated with debt issuance costs  Cody API business (a) 2,356
Interest expense (19,292) (21,433) (c)  To exclude depreciation on previously capitalized software integration costs associated with the KUPI acquisition  (f)  To primarily exclude depreciation on previously capitalized software integration costs associated with the KUPI acquisition  Decommissioning of Philadelphia sites (b) 989
LIABILITIES Other 934 (296) (d)  To exclude the costs related to the decommissioning and shutdown of the Philadelphia manufacturing and distribution sites  (g)  The tax effect of the pre-tax adjustments included at applicable tax rates  Other(c) 1,091
Current liabilities: Total other loss (19,774) (21,350) (e)  To exclude expenses associated with the Cody API Restructuring Plan  (h)  The weighted average share number for the three months ended September 30, 2018 is 37,586,327 for GAAP and 38,752,010 for the non-GAAP earnings (loss) per share calculations  Adjusted EBITDA (Non-GAAP) $                         35,068
Accounts payable $                       26,927 $         13,493 Loss before income tax (10,370) (363,128) (f)  To exclude impairment charges primarily associated with an operating lease right-of-use asset 
Accrued expenses 6,233 5,805 Income tax expense (benefit) 1,787 (75,600) (g)  To exclude non-cash interest expense associated with debt issuance costs 
Accrued payroll and payroll-related expenses 12,347 19,924 Net Loss $      (12,157) $      (287,528) (h)  To exclude the loss on extinguishment of debt primarily related to the partial repayment of outstanding Term Loan A balance 
Rebates payable 43,358 46,175 (i)  To primarily exclude accrued separation costs related to the Company's former Chief Financial Officer as well as gains on sales of assets previously held for sale 
Royalties payable 16,597 16,215 Loss per common share: (j)  To exclude the tax effect of the pre-tax adjustments included above at applicable tax rates 
Restructuring liability 1,167 2,315      Basic $            (0.32) $            (7.65) (k) The weighted average share number for the three months ended September 30, 2019 is 38,309,267 for GAAP and 40,653,053 for the non-GAAP earnings (loss) per share calculations. As a result of the 4.5% Senior Convertible Note issued on September 27, 2019, the diluted earnings per share was calculated based on the "if-converted" method.
Other current liabilties 3,652 3,652      Diluted $            (0.32) $            (7.65)
Income taxes payable - 2,198
Short-term borrowings and current portion of long-term debt 66,845 66,845 Weighted average common shares outstanding:
Current operating lease liabilities 1,932 -      Basic 38,309,267 37,586,327
Total current liabilities 179,058 176,622      Diluted 38,309,267 37,586,327
Long-term debt, net 654,432 662,203
Long-term operating lease liabilities 5,626 -
Other liabilities 14,711 14,547
TOTAL LIABILITIES 853,827 853,372
STOCKHOLDERS' EQUITY
Common stock ($0.001 par value, 100,000,000 shares authorized; 39,629,271  and 38,969,518 shares issued; 38,526,558 and 38,010,714 shares outstanding at September 30, 2019 and June 30, 2019, respectively) 40 39
Additional paid-in capital 314,645 317,023
Retained earnings 19,918 32,075
Accumulated other comprehensive loss (661) (615)
Treasury stock(1,102,713 and 958,804 shares at September 30, 2019 and June 30, 2019, respectively) (15,838) (14,481)
Total stockholders' equity 318,104 334,041
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $                  1,171,931 $    1,187,413

GAAP Adjusted** Contact: Robert Jaffe LANNETT COMPANY, INC. LANNETT COMPANY, INC. LANNETT COMPANY, INC. LANNETT COMPANY, INC. LANNETT COMPANY, INC.
Net sales $525 million to $545 million, unchanged $525 million to $545 million, unchanged **A reconciliation of Adjusted amounts to most directly comparable GAAP amounts can be found in the attached financial tables. Robert Jaffe Co., LLC CONSOLIDATED BALANCE SHEETS CONSOLIDATED STATEMENTS OF OPERATIONS RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION (UNAUDITED) RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION (UNAUDITED) RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA (UNAUDITED) (a) To exclude the operating results of the ceased Cody API business
Gross margin % Approximately 33.5% to 35.5%, unchanged Approximately 40% to 42%, unchanged (424) 288-4098 (In thousands, except share and per share data) (In thousands, except share and per share data) (In thousands, except percentages, share and per share data) (In thousands, except percentages, share and per share data) ($ in thousands) (b) To exclude the costs related to the decommissioning and shutdown of the Philadelphia manufacturing and distribution sites
R&D expense $34 million to $36 million, unchanged $34 million to $36 million, unchanged (c) To primarily exclude separation costs related to the Company's former Chief Financial Officer
SG&A expense $69 million to $72 million, up from $68 million to $71 million $63 million to $66 million, unchanged  (UNAUDITED) Three months ended September 30, 2019 Three months ended September 30, 2018 Three months ended 
Restructuring expense $2 million to $4 million, unchanged $ -- Three months ended  Net sales Cost of sales Amortization of intangibles Gross Profit Gross Margin % R&D expense SG&A expense Restructuring expenses Asset impairment charges Operating income Other income (loss) Income (loss) before income tax Income tax expense Net income (loss) Diluted earnings (loss) per share (k) Net sales Cost of sales Amortization of intangibles Gross Profit Gross Margin % R&D expense SG&A expense Restructuring expenses Asset impairment charges Operating income (loss) Other income (loss) Income (loss) before income tax Income tax expense (benefit) Net income (loss) Diluted earnings (loss) per share (h) September 30, 2019
Asset impairment charges $2 million $ -- ASSETS September 30, GAAP Reported $ 127,342 $ 77,656 $        7,028 $ 42,658 33% $ 8,940 $ 21,308 $        1,388 1,618 $    9,404 $(19,774) $       (10,370) $ 1,787 $(12,157) $   (0.32) GAAP Reported $ 155,054 $ 87,690 $      8,223 $ 59,141 38% $ 9,810 $ 20,588 $        1,022 369,499 $(341,778) $(21,350) $     (363,128) $(75,600) $ (287,528) $   (7.65)
Interest and other $70 million to $72 million, down from $71 million to $73 million $54 million to $56 million, down from $56 million to $58 million Current assets: September 30, 2019 June 30, 2019 2019 2018 Adjustments: Adjustments: Net loss $                       (12,157)
Effective tax rate Approximately 16% to 17%, down from approximately 26% to 29% Approximately 22% to 23%, unchanged Cash and cash equivalents $                     101,008 $       140,249 Amortization of intangibles (a) - - (7,028) 7,028 - - - - 7,028 - 7,028 - 7,028 Depreciation of Fixed Assets step-up (a) - (1,335) - 1,335 - - - - 1,335 - 1,335 - 1,335
Adjusted EBITDA* N/A $145 million to $160 million, unchanged Accounts receivable, net 173,109 164,752 Net sales $      127,342 $        155,054 Cody API business (b) - (1,722) - 1,722 (420) (214) - - 2,356 - 2,356 - 2,356 Amortization of intangibles (b) - - (8,223) 8,223 - - - - 8,223 - 8,223 - 8,223 Interest expense 19,292
Capital expenditures $20 million to $25 million, unchanged $20 million to $25 million, unchanged Inventories 149,162 143,971 Cost of sales  77,656 87,690 Depreciation on capitalized software costs (c) - - - - - (1,058) - - 1,058 - 1,058 - 1,058 Restructuring expenses (c) - - - - - - (1,022) - 1,022 - 1,022 - 1,022 Depreciation and amortization 12,789
Prepaid income taxes 159 - Amortization of intangibles 7,028 8,223 Decommissioning of Philadelphia sites (d) - (989) - 989 - - - - 989 - 989 - 989 Asset impairment charges (d) - - - - - - - (369,499) 369,499 369,499 - 369,499 Income tax expense 1,787
Assets held for sale 4,637 9,671 Gross profit 42,658 59,141 Restructuring expenses (e) - - - - - - (1,388) - 1,388 - 1,388 - 1,388 Non-cash interest (e) - - - - - - - - - 4,538 4,538 - 4,538 EBITDA 21,711
Other current assets 6,994 13,606 Operating expenses: Asset impairment charges (f) - - - - - - - (1,618) 1,618 - 1,618 - 1,618 Other (f) - - - - - (1,340) - - 1,340 - 1,340 - 1,340
Total current assets 435,069 472,249 Research and development expenses 8,940 9,810 Non-cash interest (g) - - - - - - - - - 4,008 4,008 - 4,008 Tax adjustments (g) - - - - - - - - - - - 81,504 (81,504) Share-based compensation 4,459
Property, plant and equipment, net 184,889 186,670 Selling, general, and administrative expenses 21,308 20,588 Loss on extinguishment of debt (h) - - - - - - - - - 2,145 2,145 - 2,145 Inventory write-down 3,510
Intangible assets, net 427,253 411,229 Restructuring expenses 1,388 1,022 Other (i) - (208) - 208 - (2,090) - - 2,298 (966) 1,332 - 1,332 Non-GAAP Adjusted $   155,054 $  86,355 $            - $  68,699 44% $  9,810 $  19,248 $              - $           - $      39,641 $  (16,812) $           22,829 $     5,904 $      16,925 $      0.44 Asset impairment charges 1,618
Goodwill - - Asset impairment charges 1,618 369,499 Tax adjustments (j) - - - - - - - - - - - 999 (999) Investment income (729)
Operating lease assets 6,410 - Total operating expenses 33,254 400,919 (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")  Loss on extinguishment of debt 2,145
Deferred tax assets 110,396 109,305 Operating income (loss) 9,404 (341,778) Non-GAAP Adjusted $   127,342 $  74,737 $              - $  52,605 41% $  8,520 $  17,946 $              - $           - $    26,139 $  (14,587) $           11,552 $  2,786 $     8,766 $      0.22 (b)  Relates to amortization of purchased intangible assets primarily related to the acquisitions of KUPI and Silarx Pharmaceuticals, Inc.  Other non-operating income (934)
Other assets 7,914 7,960 Other income (loss): (c)  To exclude expenses associated with the 2016 Restructuring Plan and, to a lesser extent, the Cody Restructuring Plan  Restructuring expenses 1,388
TOTAL ASSETS $                  1,171,931 $    1,187,413 Loss on extinguishment of debt (2,145) - (a)  To exclude amortization of purchased intangible assets primarily related to the acquisitions of KUPI and Silarx Pharmaceuticals, Inc.  (d)  To exclude asset impairment charges related to goodwill and other long-lived assets  Restructuring payments (2,536)
Investment income 729 379 (b)  To exclude the operating results of the ceased Cody API business  (e)  To exclude non-cash interest expense associated with debt issuance costs  Cody API business (a) 2,356
Interest expense (19,292) (21,433) (c)  To exclude depreciation on previously capitalized software integration costs associated with the KUPI acquisition  (f)  To primarily exclude depreciation on previously capitalized software integration costs associated with the KUPI acquisition  Decommissioning of Philadelphia sites (b) 989
LIABILITIES Other 934 (296) (d)  To exclude the costs related to the decommissioning and shutdown of the Philadelphia manufacturing and distribution sites  (g)  The tax effect of the pre-tax adjustments included at applicable tax rates  Other(c) 1,091
Current liabilities: Total other loss (19,774) (21,350) (e)  To exclude expenses associated with the Cody API Restructuring Plan  (h)  The weighted average share number for the three months ended September 30, 2018 is 37,586,327 for GAAP and 38,752,010 for the non-GAAP earnings (loss) per share calculations  Adjusted EBITDA (Non-GAAP) $                         35,068
Accounts payable $                       26,927 $         13,493 Loss before income tax (10,370) (363,128) (f)  To exclude impairment charges primarily associated with an operating lease right-of-use asset 
Accrued expenses 6,233 5,805 Income tax expense (benefit) 1,787 (75,600) (g)  To exclude non-cash interest expense associated with debt issuance costs 
Accrued payroll and payroll-related expenses 12,347 19,924 Net Loss $      (12,157) $      (287,528) (h)  To exclude the loss on extinguishment of debt primarily related to the partial repayment of outstanding Term Loan A balance 
Rebates payable 43,358 46,175 (i)  To primarily exclude accrued separation costs related to the Company's former Chief Financial Officer as well as gains on sales of assets previously held for sale 
Royalties payable 16,597 16,215 Loss per common share: (j)  To exclude the tax effect of the pre-tax adjustments included above at applicable tax rates 
Restructuring liability 1,167 2,315      Basic $            (0.32) $            (7.65) (k) The weighted average share number for the three months ended September 30, 2019 is 38,309,267 for GAAP and 40,653,053 for the non-GAAP earnings (loss) per share calculations. As a result of the 4.5% Senior Convertible Note issued on September 27, 2019, the diluted earnings per share was calculated based on the "if-converted" method.
Other current liabilties 3,652 3,652      Diluted $            (0.32) $            (7.65)
Income taxes payable - 2,198
Short-term borrowings and current portion of long-term debt 66,845 66,845 Weighted average common shares outstanding:
Current operating lease liabilities 1,932 -      Basic 38,309,267 37,586,327
Total current liabilities 179,058 176,622      Diluted 38,309,267 37,586,327
Long-term debt, net 654,432 662,203
Long-term operating lease liabilities 5,626 -
Other liabilities 14,711 14,547
TOTAL LIABILITIES 853,827 853,372
STOCKHOLDERS' EQUITY
Common stock ($0.001 par value, 100,000,000 shares authorized; 39,629,271  and 38,969,518 shares issued; 38,526,558 and 38,010,714 shares outstanding at September 30, 2019 and June 30, 2019, respectively) 40 39
Additional paid-in capital 314,645 317,023
Retained earnings 19,918 32,075
Accumulated other comprehensive loss (661) (615)
Treasury stock(1,102,713 and 958,804 shares at September 30, 2019 and June 30, 2019, respectively) (15,838) (14,481)
Total stockholders' equity 318,104 334,041
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $                  1,171,931 $    1,187,413

 

GAAP Adjusted** Contact: Robert Jaffe LANNETT COMPANY, INC. LANNETT COMPANY, INC. LANNETT COMPANY, INC. LANNETT COMPANY, INC. LANNETT COMPANY, INC. LANNETT COMPANY, INC.
Net sales $525 million to $545 million, unchanged $525 million to $545 million, unchanged **A reconciliation of Adjusted amounts to most directly comparable GAAP amounts can be found in the attached financial tables. Robert Jaffe Co., LLC CONSOLIDATED BALANCE SHEETS CONSOLIDATED STATEMENTS OF OPERATIONS RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION (UNAUDITED) RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION (UNAUDITED) RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA (UNAUDITED) (a) To exclude the operating results of the ceased Cody API business RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED INFORMATION (UNAUDITED)
Gross margin % Approximately 33.5% to 35.5%, unchanged Approximately 40% to 42%, unchanged (424) 288-4098 (In thousands, except share and per share data) (In thousands, except share and per share data) (In thousands, except percentages, share and per share data) (In thousands, except percentages, share and per share data) ($ in thousands) (b) To exclude the costs related to the decommissioning and shutdown of the Philadelphia manufacturing and distribution sites ($ in millions)
R&D expense $34 million to $36 million, unchanged $34 million to $36 million, unchanged (c) To primarily exclude separation costs related to the Company's former Chief Financial Officer
SG&A expense $69 million to $72 million, up from $68 million to $71 million $63 million to $66 million, unchanged  (UNAUDITED) Three months ended September 30, 2019 Three months ended September 30, 2018 Three months ended  Fiscal Year 2020 Guidance
Restructuring expense $2 million to $4 million, unchanged $ -- Three months ended  Net sales Cost of sales Amortization of intangibles Gross Profit Gross Margin % R&D expense SG&A expense Restructuring expenses Asset impairment charges Operating income Other income (loss) Income (loss) before income tax Income tax expense Net income (loss) Diluted earnings (loss) per share (k) Net sales Cost of sales Amortization of intangibles Gross Profit Gross Margin % R&D expense SG&A expense Restructuring expenses Asset impairment charges Operating income (loss) Other income (loss) Income (loss) before income tax Income tax expense (benefit) Net income (loss) Diluted earnings (loss) per share (h) September 30, 2019 Non-GAAP
Asset impairment charges $2 million $ -- ASSETS September 30, GAAP Reported $ 127,342 $ 77,656 $        7,028 $ 42,658 33% $ 8,940 $ 21,308 $        1,388 1,618 $    9,404 $(19,774) $       (10,370) $ 1,787 $(12,157) $   (0.32) GAAP Reported $ 155,054 $ 87,690 $      8,223 $ 59,141 38% $ 9,810 $ 20,588 $        1,022 369,499 $(341,778) $(21,350) $     (363,128) $(75,600) $ (287,528) $   (7.65) GAAP Adjustments Adjusted
Interest and other $70 million to $72 million, down from $71 million to $73 million $54 million to $56 million, down from $56 million to $58 million Current assets: September 30, 2019 June 30, 2019 2019 2018 Adjustments: Adjustments: Net loss $                       (12,157)
Effective tax rate Approximately 16% to 17%, down from approximately 26% to 29% Approximately 22% to 23%, unchanged Cash and cash equivalents $                     101,008 $       140,249 Amortization of intangibles (a) - - (7,028) 7,028 - - - - 7,028 - 7,028 - 7,028 Depreciation of Fixed Assets step-up (a) - (1,335) - 1,335 - - - - 1,335 - 1,335 - 1,335 Net sales  $525 - $545  -  $525 - $545 
Adjusted EBITDA* N/A $145 million to $160 million, unchanged Accounts receivable, net 173,109 164,752 Net sales $      127,342 $        155,054 Cody API business (b) - (1,722) - 1,722 (420) (214) - - 2,356 - 2,356 - 2,356 Amortization of intangibles (b) - - (8,223) 8,223 - - - - 8,223 - 8,223 - 8,223 Interest expense 19,292 Gross margin percentage approx. 33.5% to 35.5% (6.5%)  (a)  approx. 40% to 42%
Capital expenditures $20 million to $25 million, unchanged $20 million to $25 million, unchanged Inventories 149,162 143,971 Cost of sales  77,656 87,690 Depreciation on capitalized software costs (c) - - - - - (1,058) - - 1,058 - 1,058 - 1,058 Restructuring expenses (c) - - - - - - (1,022) - 1,022 - 1,022 - 1,022 Depreciation and amortization 12,789 R&D expense  $34 - $36  -  $34 - $36 
Prepaid income taxes 159 - Amortization of intangibles 7,028 8,223 Decommissioning of Philadelphia sites (d) - (989) - 989 - - - - 989 - 989 - 989 Asset impairment charges (d) - - - - - - - (369,499) 369,499 369,499 - 369,499 Income tax expense 1,787 SG&A expense  $69 - $72  ($6)  (b)   $63 - $66 
Assets held for sale 4,637 9,671 Gross profit 42,658 59,141 Restructuring expenses (e) - - - - - - (1,388) - 1,388 - 1,388 - 1,388 Non-cash interest (e) - - - - - - - - - 4,538 4,538 - 4,538 EBITDA 21,711 Restructuring expense  $2 - $4   ($2 - $4)   (c)  -
Other current assets 6,994 13,606 Operating expenses: Asset impairment charges (f) - - - - - - - (1,618) 1,618 - 1,618 - 1,618 Other (f) - - - - - (1,340) - - 1,340 - 1,340 - 1,340 Asset impairment charges $2 ($2)  (d)  -
Total current assets 435,069 472,249 Research and development expenses 8,940 9,810 Non-cash interest (g) - - - - - - - - - 4,008 4,008 - 4,008 Tax adjustments (g) - - - - - - - - - - - 81,504 (81,504) Share-based compensation 4,459 Interest and other  $70 - $72  ($16)  (e)   $54 - $56 
Property, plant and equipment, net 184,889 186,670 Selling, general, and administrative expenses 21,308 20,588 Loss on extinguishment of debt (h) - - - - - - - - - 2,145 2,145 - 2,145 Inventory write-down 3,510 Effective tax rate  approx. 16% to 17%  6%  (f)  approx. 22% to 23%
Intangible assets, net 427,253 411,229 Restructuring expenses 1,388 1,022 Other (i) - (208) - 208 - (2,090) - - 2,298 (966) 1,332 - 1,332 Non-GAAP Adjusted $   155,054 $  86,355 $            - $  68,699 44% $  9,810 $  19,248 $              - $           - $      39,641 $  (16,812) $           22,829 $     5,904 $      16,925 $      0.44 Asset impairment charges 1,618 Adjusted EBITDA  N/A   N/A   $145 - $160 
Goodwill - - Asset impairment charges 1,618 369,499 Tax adjustments (j) - - - - - - - - - - - 999 (999) Investment income (729) Capital expenditures  $20 - $25  -  $20 - $25 
Operating lease assets 6,410 - Total operating expenses 33,254 400,919 (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")  Loss on extinguishment of debt 2,145
Deferred tax assets 110,396 109,305 Operating income (loss) 9,404 (341,778) Non-GAAP Adjusted $   127,342 $  74,737 $              - $  52,605 41% $  8,520 $  17,946 $              - $           - $    26,139 $  (14,587) $           11,552 $  2,786 $     8,766 $      0.22 (b)  Relates to amortization of purchased intangible assets primarily related to the acquisitions of KUPI and Silarx Pharmaceuticals, Inc.  Other non-operating income (934)
Other assets 7,914 7,960 Other income (loss): (c)  To exclude expenses associated with the 2016 Restructuring Plan and, to a lesser extent, the Cody Restructuring Plan  Restructuring expenses 1,388
TOTAL ASSETS $                  1,171,931 $    1,187,413 Loss on extinguishment of debt (2,145) - (a)  To exclude amortization of purchased intangible assets primarily related to the acquisitions of KUPI and Silarx Pharmaceuticals, Inc.  (d)  To exclude asset impairment charges related to goodwill and other long-lived assets  Restructuring payments (2,536)
Investment income 729 379 (b)  To exclude the operating results of the ceased Cody API business  (e)  To exclude non-cash interest expense associated with debt issuance costs  Cody API business (a) 2,356
Interest expense (19,292) (21,433) (c)  To exclude depreciation on previously capitalized software integration costs associated with the KUPI acquisition  (f)  To primarily exclude depreciation on previously capitalized software integration costs associated with the KUPI acquisition  Decommissioning of Philadelphia sites (b) 989
LIABILITIES Other 934 (296) (d)  To exclude the costs related to the decommissioning and shutdown of the Philadelphia manufacturing and distribution sites  (g)  The tax effect of the pre-tax adjustments included at applicable tax rates  Other(c) 1,091
Current liabilities: Total other loss (19,774) (21,350) (e)  To exclude expenses associated with the Cody API Restructuring Plan  (h)  The weighted average share number for the three months ended September 30, 2018 is 37,586,327 for GAAP and 38,752,010 for the non-GAAP earnings (loss) per share calculations  Adjusted EBITDA (Non-GAAP) $                         35,068
Accounts payable $                       26,927 $         13,493 Loss before income tax (10,370) (363,128) (f)  To exclude impairment charges primarily associated with an operating lease right-of-use asset 
Accrued expenses 6,233 5,805 Income tax expense (benefit) 1,787 (75,600) (g)  To exclude non-cash interest expense associated with debt issuance costs 
Accrued payroll and payroll-related expenses 12,347 19,924 Net Loss $      (12,157) $      (287,528) (h)  To exclude the loss on extinguishment of debt primarily related to the partial repayment of outstanding Term Loan A balance 
Rebates payable 43,358 46,175 (i)  To primarily exclude accrued separation costs related to the Company's former Chief Financial Officer as well as gains on sales of assets previously held for sale 
Royalties payable 16,597 16,215 Loss per common share: (j)  To exclude the tax effect of the pre-tax adjustments included above at applicable tax rates 
Restructuring liability 1,167 2,315      Basic $            (0.32) $            (7.65) (k) The weighted average share number for the three months ended September 30, 2019 is 38,309,267 for GAAP and 40,653,053 for the non-GAAP earnings (loss) per share calculations. As a result of the 4.5% Senior Convertible Note issued on September 27, 2019, the diluted earnings per share was calculated based on the "if-converted" method.
Other current liabilties 3,652 3,652      Diluted $            (0.32) $            (7.65)
Income taxes payable - 2,198
Short-term borrowings and current portion of long-term debt 66,845 66,845 Weighted average common shares outstanding:
Current operating lease liabilities 1,932 -      Basic 38,309,267 37,586,327
Total current liabilities 179,058 176,622      Diluted 38,309,267 37,586,327
Long-term debt, net 654,432 662,203
Long-term operating lease liabilities 5,626 -
Other liabilities 14,711 14,547
TOTAL LIABILITIES 853,827 853,372
STOCKHOLDERS' EQUITY
Common stock ($0.001 par value, 100,000,000 shares authorized; 39,629,271  and 38,969,518 shares issued; 38,526,558 and 38,010,714 shares outstanding at September 30, 2019 and June 30, 2019, respectively) 40 39
Additional paid-in capital 314,645 317,023
Retained earnings 19,918 32,075
Accumulated other comprehensive loss (661) (615)
Treasury stock(1,102,713 and 958,804 shares at September 30, 2019 and June 30, 2019, respectively) (15,838) (14,481)
Total stockholders' equity 318,104 334,041
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $                  1,171,931 $    1,187,413

GAAP Adjusted** Contact: Robert Jaffe LANNETT COMPANY, INC. LANNETT COMPANY, INC. LANNETT COMPANY, INC. LANNETT COMPANY, INC. LANNETT COMPANY, INC. LANNETT COMPANY, INC.
Net sales $525 million to $545 million, unchanged $525 million to $545 million, unchanged **A reconciliation of Adjusted amounts to most directly comparable GAAP amounts can be found in the attached financial tables. Robert Jaffe Co., LLC CONSOLIDATED BALANCE SHEETS CONSOLIDATED STATEMENTS OF OPERATIONS RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION (UNAUDITED) RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION (UNAUDITED) RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA (UNAUDITED) (a) To exclude the operating results of the ceased Cody API business RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED INFORMATION (UNAUDITED) (a) The adjustment primarily reflects amortization of purchased intangible assets related to the acquisition of Kremers Urban Pharmaceuticals, Inc. ("KUPI")
Gross margin % Approximately 33.5% to 35.5%, unchanged Approximately 40% to 42%, unchanged (424) 288-4098 (In thousands, except share and per share data) (In thousands, except share and per share data) (In thousands, except percentages, share and per share data) (In thousands, except percentages, share and per share data) ($ in thousands) (b) To exclude the costs related to the decommissioning and shutdown of the Philadelphia manufacturing and distribution sites ($ in millions) (b) The adjustment primarily excludes depreciation on previously capitalized software integration costs associated with the KUPI acquisition
R&D expense $34 million to $36 million, unchanged $34 million to $36 million, unchanged (c) To primarily exclude separation costs related to the Company's former Chief Financial Officer (c) To exclude expenses associated with the Cody API Restructuring Plan
SG&A expense $69 million to $72 million, up from $68 million to $71 million $63 million to $66 million, unchanged  (UNAUDITED) Three months ended September 30, 2019 Three months ended September 30, 2018 Three months ended  Fiscal Year 2020 Guidance (d) This adjustment primarily excludes an impairment charge associated with an operating lease right-of-use asset
Restructuring expense $2 million to $4 million, unchanged $ -- Three months ended  Net sales Cost of sales Amortization of intangibles Gross Profit Gross Margin % R&D expense SG&A expense Restructuring expenses Asset impairment charges Operating income Other income (loss) Income (loss) before income tax Income tax expense Net income (loss) Diluted earnings (loss) per share (k) Net sales Cost of sales Amortization of intangibles Gross Profit Gross Margin % R&D expense SG&A expense Restructuring expenses Asset impairment charges Operating income (loss) Other income (loss) Income (loss) before income tax Income tax expense (benefit) Net income (loss) Diluted earnings (loss) per share (h) September 30, 2019 Non-GAAP (e) The adjustment primarily reflects non-cash interest expense associated with debt issuance costs
Asset impairment charges $2 million $ -- ASSETS September 30, GAAP Reported $ 127,342 $ 77,656 $        7,028 $ 42,658 33% $ 8,940 $ 21,308 $        1,388 1,618 $    9,404 $(19,774) $       (10,370) $ 1,787 $(12,157) $   (0.32) GAAP Reported $ 155,054 $ 87,690 $      8,223 $ 59,141 38% $ 9,810 $ 20,588 $        1,022 369,499 $(341,778) $(21,350) $     (363,128) $(75,600) $ (287,528) $   (7.65) GAAP Adjustments Adjusted (f) The adjustment reflects the impact of tax credits and deductions relative to expected annual pre-tax income
Interest and other $70 million to $72 million, down from $71 million to $73 million $54 million to $56 million, down from $56 million to $58 million Current assets: September 30, 2019 June 30, 2019 2019 2018 Adjustments: Adjustments: Net loss $                       (12,157)
Effective tax rate Approximately 16% to 17%, down from approximately 26% to 29% Approximately 22% to 23%, unchanged Cash and cash equivalents $                     101,008 $       140,249 Amortization of intangibles (a) - - (7,028) 7,028 - - - - 7,028 - 7,028 - 7,028 Depreciation of Fixed Assets step-up (a) - (1,335) - 1,335 - - - - 1,335 - 1,335 - 1,335 Net sales  $525 - $545  -  $525 - $545 
Adjusted EBITDA* N/A $145 million to $160 million, unchanged Accounts receivable, net 173,109 164,752 Net sales $      127,342 $        155,054 Cody API business (b) - (1,722) - 1,722 (420) (214) - - 2,356 - 2,356 - 2,356 Amortization of intangibles (b) - - (8,223) 8,223 - - - - 8,223 - 8,223 - 8,223 Interest expense 19,292 Gross margin percentage approx. 33.5% to 35.5% (6.5%)  (a)  approx. 40% to 42%
Capital expenditures $20 million to $25 million, unchanged $20 million to $25 million, unchanged Inventories 149,162 143,971 Cost of sales  77,656 87,690 Depreciation on capitalized software costs (c) - - - - - (1,058) - - 1,058 - 1,058 - 1,058 Restructuring expenses (c) - - - - - - (1,022) - 1,022 - 1,022 - 1,022 Depreciation and amortization 12,789 R&D expense  $34 - $36  -  $34 - $36 
Prepaid income taxes 159 - Amortization of intangibles 7,028 8,223 Decommissioning of Philadelphia sites (d) - (989) - 989 - - - - 989 - 989 - 989 Asset impairment charges (d) - - - - - - - (369,499) 369,499 369,499 - 369,499 Income tax expense 1,787 SG&A expense  $69 - $72  ($6)  (b)   $63 - $66 
Assets held for sale 4,637 9,671 Gross profit 42,658 59,141 Restructuring expenses (e) - - - - - - (1,388) - 1,388 - 1,388 - 1,388 Non-cash interest (e) - - - - - - - - - 4,538 4,538 - 4,538 EBITDA 21,711 Restructuring expense  $2 - $4   ($2 - $4)   (c)  -
Other current assets 6,994 13,606 Operating expenses: Asset impairment charges (f) - - - - - - - (1,618) 1,618 - 1,618 - 1,618 Other (f) - - - - - (1,340) - - 1,340 - 1,340 - 1,340 Asset impairment charges $2 ($2)  (d)  -
Total current assets 435,069 472,249 Research and development expenses 8,940 9,810 Non-cash interest (g) - - - - - - - - - 4,008 4,008 - 4,008 Tax adjustments (g) - - - - - - - - - - - 81,504 (81,504) Share-based compensation 4,459 Interest and other  $70 - $72  ($16)  (e)   $54 - $56 
Property, plant and equipment, net 184,889 186,670 Selling, general, and administrative expenses 21,308 20,588 Loss on extinguishment of debt (h) - - - - - - - - - 2,145 2,145 - 2,145 Inventory write-down 3,510 Effective tax rate  approx. 16% to 17%  6%  (f)  approx. 22% to 23%
Intangible assets, net 427,253 411,229 Restructuring expenses 1,388 1,022 Other (i) - (208) - 208 - (2,090) - - 2,298 (966) 1,332 - 1,332 Non-GAAP Adjusted $   155,054 $  86,355 $            - $  68,699 44% $  9,810 $  19,248 $              - $           - $      39,641 $  (16,812) $           22,829 $     5,904 $      16,925 $      0.44 Asset impairment charges 1,618 Adjusted EBITDA  N/A   N/A   $145 - $160 
Goodwill - - Asset impairment charges 1,618 369,499 Tax adjustments (j) - - - - - - - - - - - 999 (999) Investment income (729) Capital expenditures  $20 - $25  -  $20 - $25 
Operating lease assets 6,410 - Total operating expenses 33,254 400,919 (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")  Loss on extinguishment of debt 2,145
Deferred tax assets 110,396 109,305 Operating income (loss) 9,404 (341,778) Non-GAAP Adjusted $   127,342 $  74,737 $              - $  52,605 41% $  8,520 $  17,946 $              - $           - $    26,139 $  (14,587) $           11,552 $  2,786 $     8,766 $      0.22 (b)  Relates to amortization of purchased intangible assets primarily related to the acquisitions of KUPI and Silarx Pharmaceuticals, Inc.  Other non-operating income (934)
Other assets 7,914 7,960 Other income (loss): (c)  To exclude expenses associated with the 2016 Restructuring Plan and, to a lesser extent, the Cody Restructuring Plan  Restructuring expenses 1,388
TOTAL ASSETS $                  1,171,931 $    1,187,413 Loss on extinguishment of debt (2,145) - (a)  To exclude amortization of purchased intangible assets primarily related to the acquisitions of KUPI and Silarx Pharmaceuticals, Inc.  (d)  To exclude asset impairment charges related to goodwill and other long-lived assets  Restructuring payments (2,536)
Investment income 729 379 (b)  To exclude the operating results of the ceased Cody API business  (e)  To exclude non-cash interest expense associated with debt issuance costs  Cody API business (a) 2,356
Interest expense (19,292) (21,433) (c)  To exclude depreciation on previously capitalized software integration costs associated with the KUPI acquisition  (f)  To primarily exclude depreciation on previously capitalized software integration costs associated with the KUPI acquisition  Decommissioning of Philadelphia sites (b) 989
LIABILITIES Other 934 (296) (d)  To exclude the costs related to the decommissioning and shutdown of the Philadelphia manufacturing and distribution sites  (g)  The tax effect of the pre-tax adjustments included at applicable tax rates  Other(c) 1,091
Current liabilities: Total other loss (19,774) (21,350) (e)  To exclude expenses associated with the Cody API Restructuring Plan  (h)  The weighted average share number for the three months ended September 30, 2018 is 37,586,327 for GAAP and 38,752,010 for the non-GAAP earnings (loss) per share calculations  Adjusted EBITDA (Non-GAAP) $                         35,068
Accounts payable $                       26,927 $         13,493 Loss before income tax (10,370) (363,128) (f)  To exclude impairment charges primarily associated with an operating lease right-of-use asset 
Accrued expenses 6,233 5,805 Income tax expense (benefit) 1,787 (75,600) (g)  To exclude non-cash interest expense associated with debt issuance costs 
Accrued payroll and payroll-related expenses 12,347 19,924 Net Loss $      (12,157) $      (287,528) (h)  To exclude the loss on extinguishment of debt primarily related to the partial repayment of outstanding Term Loan A balance 
Rebates payable 43,358 46,175 (i)  To primarily exclude accrued separation costs related to the Company's former Chief Financial Officer as well as gains on sales of assets previously held for sale 
Royalties payable 16,597 16,215 Loss per common share: (j)  To exclude the tax effect of the pre-tax adjustments included above at applicable tax rates 
Restructuring liability 1,167 2,315      Basic $            (0.32) $            (7.65) (k) The weighted average share number for the three months ended September 30, 2019 is 38,309,267 for GAAP and 40,653,053 for the non-GAAP earnings (loss) per share calculations. As a result of the 4.5% Senior Convertible Note issued on September 27, 2019, the diluted earnings per share was calculated based on the "if-converted" method.
Other current liabilties 3,652 3,652      Diluted $            (0.32) $            (7.65)
Income taxes payable - 2,198
Short-term borrowings and current portion of long-term debt 66,845 66,845 Weighted average common shares outstanding:
Current operating lease liabilities 1,932 -      Basic 38,309,267 37,586,327
Total current liabilities 179,058 176,622      Diluted 38,309,267 37,586,327
Long-term debt, net 654,432 662,203
Long-term operating lease liabilities 5,626 -
Other liabilities 14,711 14,547
TOTAL LIABILITIES 853,827 853,372
STOCKHOLDERS' EQUITY
Common stock ($0.001 par value, 100,000,000 shares authorized; 39,629,271  and 38,969,518 shares issued; 38,526,558 and 38,010,714 shares outstanding at September 30, 2019 and June 30, 2019, respectively) 40 39
Additional paid-in capital 314,645 317,023
Retained earnings 19,918 32,075
Accumulated other comprehensive loss (661) (615)
Treasury stock(1,102,713 and 958,804 shares at September 30, 2019 and June 30, 2019, respectively) (15,838) (14,481)
Total stockholders' equity 318,104 334,041
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $                  1,171,931 $    1,187,413

 

GAAP Adjusted** Contact: Robert Jaffe LANNETT COMPANY, INC. LANNETT COMPANY, INC. LANNETT COMPANY, INC. LANNETT COMPANY, INC. LANNETT COMPANY, INC. LANNETT COMPANY, INC. LANNETT COMPANY, INC.
Net sales $525 million to $545 million, unchanged $525 million to $545 million, unchanged **A reconciliation of Adjusted amounts to most directly comparable GAAP amounts can be found in the attached financial tables. Robert Jaffe Co., LLC CONSOLIDATED BALANCE SHEETS CONSOLIDATED STATEMENTS OF OPERATIONS RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION (UNAUDITED) RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION (UNAUDITED) RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA (UNAUDITED) (a) To exclude the operating results of the ceased Cody API business RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED INFORMATION (UNAUDITED) (a) The adjustment primarily reflects amortization of purchased intangible assets related to the acquisition of Kremers Urban Pharmaceuticals, Inc. ("KUPI") RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA (UNAUDITED)
Gross margin % Approximately 33.5% to 35.5%, unchanged Approximately 40% to 42%, unchanged (424) 288-4098 (In thousands, except share and per share data) (In thousands, except share and per share data) (In thousands, except percentages, share and per share data) (In thousands, except percentages, share and per share data) ($ in thousands) (b) To exclude the costs related to the decommissioning and shutdown of the Philadelphia manufacturing and distribution sites ($ in millions) (b) The adjustment primarily excludes depreciation on previously capitalized software integration costs associated with the KUPI acquisition ($ in millions)
R&D expense $34 million to $36 million, unchanged $34 million to $36 million, unchanged (c) To primarily exclude separation costs related to the Company's former Chief Financial Officer (c) To exclude expenses associated with the Cody API Restructuring Plan
SG&A expense $69 million to $72 million, up from $68 million to $71 million $63 million to $66 million, unchanged  (UNAUDITED) Three months ended September 30, 2019 Three months ended September 30, 2018 Three months ended  Fiscal Year 2020 Guidance (d) This adjustment primarily excludes an impairment charge associated with an operating lease right-of-use asset Fiscal Year 2020 Guidance
Restructuring expense $2 million to $4 million, unchanged $ -- Three months ended  Net sales Cost of sales Amortization of intangibles Gross Profit Gross Margin % R&D expense SG&A expense Restructuring expenses Asset impairment charges Operating income Other income (loss) Income (loss) before income tax Income tax expense Net income (loss) Diluted earnings (loss) per share (k) Net sales Cost of sales Amortization of intangibles Gross Profit Gross Margin % R&D expense SG&A expense Restructuring expenses Asset impairment charges Operating income (loss) Other income (loss) Income (loss) before income tax Income tax expense (benefit) Net income (loss) Diluted earnings (loss) per share (h) September 30, 2019 Non-GAAP (e) The adjustment primarily reflects non-cash interest expense associated with debt issuance costs Low High
Asset impairment charges $2 million $ -- ASSETS September 30, GAAP Reported $ 127,342 $ 77,656 $        7,028 $ 42,658 33% $ 8,940 $ 21,308 $        1,388 1,618 $    9,404 $(19,774) $       (10,370) $ 1,787 $(12,157) $   (0.32) GAAP Reported $ 155,054 $ 87,690 $      8,223 $ 59,141 38% $ 9,810 $ 20,588 $        1,022 369,499 $(341,778) $(21,350) $     (363,128) $(75,600) $ (287,528) $   (7.65) GAAP Adjustments Adjusted (f) The adjustment reflects the impact of tax credits and deductions relative to expected annual pre-tax income
Interest and other $70 million to $72 million, down from $71 million to $73 million $54 million to $56 million, down from $56 million to $58 million Current assets: September 30, 2019 June 30, 2019 2019 2018 Adjustments: Adjustments: Net loss $                       (12,157) Net income (loss) $    (1.0) $     6.0
Effective tax rate Approximately 16% to 17%, down from approximately 26% to 29% Approximately 22% to 23%, unchanged Cash and cash equivalents $                     101,008 $       140,249 Amortization of intangibles (a) - - (7,028) 7,028 - - - - 7,028 - 7,028 - 7,028 Depreciation of Fixed Assets step-up (a) - (1,335) - 1,335 - - - - 1,335 - 1,335 - 1,335 Net sales  $525 - $545  -  $525 - $545 
Adjusted EBITDA* N/A $145 million to $160 million, unchanged Accounts receivable, net 173,109 164,752 Net sales $      127,342 $        155,054 Cody API business (b) - (1,722) - 1,722 (420) (214) - - 2,356 - 2,356 - 2,356 Amortization of intangibles (b) - - (8,223) 8,223 - - - - 8,223 - 8,223 - 8,223 Interest expense 19,292 Gross margin percentage approx. 33.5% to 35.5% (6.5%)  (a)  approx. 40% to 42% Interest expense 70.0 72.0
Capital expenditures $20 million to $25 million, unchanged $20 million to $25 million, unchanged Inventories 149,162 143,971 Cost of sales  77,656 87,690 Depreciation on capitalized software costs (c) - - - - - (1,058) - - 1,058 - 1,058 - 1,058 Restructuring expenses (c) - - - - - - (1,022) - 1,022 - 1,022 - 1,022 Depreciation and amortization 12,789 R&D expense  $34 - $36  -  $34 - $36  Depreciation and amortization 56.0 57.0
Prepaid income taxes 159 - Amortization of intangibles 7,028 8,223 Decommissioning of Philadelphia sites (d) - (989) - 989 - - - - 989 - 989 - 989 Asset impairment charges (d) - - - - - - - (369,499) 369,499 369,499 - 369,499 Income tax expense 1,787 SG&A expense  $69 - $72  ($6)  (b)   $63 - $66  Income taxes - 2.0
Assets held for sale 4,637 9,671 Gross profit 42,658 59,141 Restructuring expenses (e) - - - - - - (1,388) - 1,388 - 1,388 - 1,388 Non-cash interest (e) - - - - - - - - - 4,538 4,538 - 4,538 EBITDA 21,711 Restructuring expense  $2 - $4   ($2 - $4)   (c)  - EBITDA 125.0 137.0
Other current assets 6,994 13,606 Operating expenses: Asset impairment charges (f) - - - - - - - (1,618) 1,618 - 1,618 - 1,618 Other (f) - - - - - (1,340) - - 1,340 - 1,340 - 1,340 Asset impairment charges $2 ($2)  (d)  -
Total current assets 435,069 472,249 Research and development expenses 8,940 9,810 Non-cash interest (g) - - - - - - - - - 4,008 4,008 - 4,008 Tax adjustments (g) - - - - - - - - - - - 81,504 (81,504) Share-based compensation 4,459 Interest and other  $70 - $72  ($16)  (e)   $54 - $56  Share-based compensation 9.0 10.0
Property, plant and equipment, net 184,889 186,670 Selling, general, and administrative expenses 21,308 20,588 Loss on extinguishment of debt (h) - - - - - - - - - 2,145 2,145 - 2,145 Inventory write-down 3,510 Effective tax rate  approx. 16% to 17%  6%  (f)  approx. 22% to 23% Inventory write-down 7.0 8.0
Intangible assets, net 427,253 411,229 Restructuring expenses 1,388 1,022 Other (i) - (208) - 208 - (2,090) - - 2,298 (966) 1,332 - 1,332 Non-GAAP Adjusted $   155,054 $  86,355 $            - $  68,699 44% $  9,810 $  19,248 $              - $           - $      39,641 $  (16,812) $           22,829 $     5,904 $      16,925 $      0.44 Asset impairment charges 1,618 Adjusted EBITDA  N/A   N/A   $145 - $160  Separation costs 1.0 1.0
Goodwill - - Asset impairment charges 1,618 369,499 Tax adjustments (j) - - - - - - - - - - - 999 (999) Investment income (729) Capital expenditures  $20 - $25  -  $20 - $25  Cody API business 2.0 2.0
Operating lease assets 6,410 - Total operating expenses 33,254 400,919 (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")  Loss on extinguishment of debt 2,145 Inpairment 2.0 2.0
Deferred tax assets 110,396 109,305 Operating income (loss) 9,404 (341,778) Non-GAAP Adjusted $   127,342 $  74,737 $              - $  52,605 41% $  8,520 $  17,946 $              - $           - $    26,139 $  (14,587) $           11,552 $  2,786 $     8,766 $      0.22 (b)  Relates to amortization of purchased intangible assets primarily related to the acquisitions of KUPI and Silarx Pharmaceuticals, Inc.  Other non-operating income (934) Restructuring expenses 2.0 4.0
Other assets 7,914 7,960 Other income (loss): (c)  To exclude expenses associated with the 2016 Restructuring Plan and, to a lesser extent, the Cody Restructuring Plan  Restructuring expenses 1,388 Restructuring payments (3.0) (4.0)
TOTAL ASSETS $                  1,171,931 $    1,187,413 Loss on extinguishment of debt (2,145) - (a)  To exclude amortization of purchased intangible assets primarily related to the acquisitions of KUPI and Silarx Pharmaceuticals, Inc.  (d)  To exclude asset impairment charges related to goodwill and other long-lived assets  Restructuring payments (2,536) Adjusted EBITDA (Non-GAAP) $ 145.0 $ 160.0
Investment income 729 379 (b)  To exclude the operating results of the ceased Cody API business  (e)  To exclude non-cash interest expense associated with debt issuance costs  Cody API business (a) 2,356
Interest expense (19,292) (21,433) (c)  To exclude depreciation on previously capitalized software integration costs associated with the KUPI acquisition  (f)  To primarily exclude depreciation on previously capitalized software integration costs associated with the KUPI acquisition  Decommissioning of Philadelphia sites (b) 989
LIABILITIES Other 934 (296) (d)  To exclude the costs related to the decommissioning and shutdown of the Philadelphia manufacturing and distribution sites  (g)  The tax effect of the pre-tax adjustments included at applicable tax rates  Other(c) 1,091
Current liabilities: Total other loss (19,774) (21,350) (e)  To exclude expenses associated with the Cody API Restructuring Plan  (h)  The weighted average share number for the three months ended September 30, 2018 is 37,586,327 for GAAP and 38,752,010 for the non-GAAP earnings (loss) per share calculations  Adjusted EBITDA (Non-GAAP) $                         35,068
Accounts payable $                       26,927 $         13,493 Loss before income tax (10,370) (363,128) (f)  To exclude impairment charges primarily associated with an operating lease right-of-use asset 
Accrued expenses 6,233 5,805 Income tax expense (benefit) 1,787 (75,600) (g)  To exclude non-cash interest expense associated with debt issuance costs 
Accrued payroll and payroll-related expenses 12,347 19,924 Net Loss $      (12,157) $      (287,528) (h)  To exclude the loss on extinguishment of debt primarily related to the partial repayment of outstanding Term Loan A balance 
Rebates payable 43,358 46,175 (i)  To primarily exclude accrued separation costs related to the Company's former Chief Financial Officer as well as gains on sales of assets previously held for sale 
Royalties payable 16,597 16,215 Loss per common share: (j)  To exclude the tax effect of the pre-tax adjustments included above at applicable tax rates 
Restructuring liability 1,167 2,315      Basic $            (0.32) $            (7.65) (k) The weighted average share number for the three months ended September 30, 2019 is 38,309,267 for GAAP and 40,653,053 for the non-GAAP earnings (loss) per share calculations. As a result of the 4.5% Senior Convertible Note issued on September 27, 2019, the diluted earnings per share was calculated based on the "if-converted" method.
Other current liabilties 3,652 3,652      Diluted $            (0.32) $            (7.65)
Income taxes payable - 2,198
Short-term borrowings and current portion of long-term debt 66,845 66,845 Weighted average common shares outstanding:
Current operating lease liabilities 1,932 -      Basic 38,309,267 37,586,327
Total current liabilities 179,058 176,622      Diluted 38,309,267 37,586,327
Long-term debt, net 654,432 662,203
Long-term operating lease liabilities 5,626 -
Other liabilities 14,711 14,547
TOTAL LIABILITIES 853,827 853,372
STOCKHOLDERS' EQUITY
Common stock ($0.001 par value, 100,000,000 shares authorized; 39,629,271  and 38,969,518 shares issued; 38,526,558 and 38,010,714 shares outstanding at September 30, 2019 and June 30, 2019, respectively) 40 39
Additional paid-in capital 314,645 317,023
Retained earnings 19,918 32,075
Accumulated other comprehensive loss (661) (615)
Treasury stock(1,102,713 and 958,804 shares at September 30, 2019 and June 30, 2019, respectively) (15,838) (14,481)
Total stockholders' equity 318,104 334,041
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $                  1,171,931 $    1,187,413

 

GAAP Adjusted** Contact: Robert Jaffe LANNETT COMPANY, INC. LANNETT COMPANY, INC. LANNETT COMPANY, INC. LANNETT COMPANY, INC. LANNETT COMPANY, INC. LANNETT COMPANY, INC. LANNETT COMPANY, INC. LANNETT COMPANY, INC.
Net sales $525 million to $545 million, unchanged $525 million to $545 million, unchanged **A reconciliation of Adjusted amounts to most directly comparable GAAP amounts can be found in the attached financial tables. Robert Jaffe Co., LLC CONSOLIDATED BALANCE SHEETS CONSOLIDATED STATEMENTS OF OPERATIONS RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION (UNAUDITED) RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION (UNAUDITED) RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA (UNAUDITED) (a) To exclude the operating results of the ceased Cody API business RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED INFORMATION (UNAUDITED) (a) The adjustment primarily reflects amortization of purchased intangible assets related to the acquisition of Kremers Urban Pharmaceuticals, Inc. ("KUPI") RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA (UNAUDITED) NET SALES BY MEDICAL INDICATION
Gross margin % Approximately 33.5% to 35.5%, unchanged Approximately 40% to 42%, unchanged (424) 288-4098 (In thousands, except share and per share data) (In thousands, except share and per share data) (In thousands, except percentages, share and per share data) (In thousands, except percentages, share and per share data) ($ in thousands) (b) To exclude the costs related to the decommissioning and shutdown of the Philadelphia manufacturing and distribution sites ($ in millions) (b) The adjustment primarily excludes depreciation on previously capitalized software integration costs associated with the KUPI acquisition ($ in millions)
R&D expense $34 million to $36 million, unchanged $34 million to $36 million, unchanged (c) To primarily exclude separation costs related to the Company's former Chief Financial Officer (c) To exclude expenses associated with the Cody API Restructuring Plan Three months ended
SG&A expense $69 million to $72 million, up from $68 million to $71 million $63 million to $66 million, unchanged  (UNAUDITED) Three months ended September 30, 2019 Three months ended September 30, 2018 Three months ended  Fiscal Year 2020 Guidance (d) This adjustment primarily excludes an impairment charge associated with an operating lease right-of-use asset Fiscal Year 2020 Guidance ($ in thousands) September 30, 
Restructuring expense $2 million to $4 million, unchanged $ -- Three months ended  Net sales Cost of sales Amortization of intangibles Gross Profit Gross Margin % R&D expense SG&A expense Restructuring expenses Asset impairment charges Operating income Other income (loss) Income (loss) before income tax Income tax expense Net income (loss) Diluted earnings (loss) per share (k) Net sales Cost of sales Amortization of intangibles Gross Profit Gross Margin % R&D expense SG&A expense Restructuring expenses Asset impairment charges Operating income (loss) Other income (loss) Income (loss) before income tax Income tax expense (benefit) Net income (loss) Diluted earnings (loss) per share (h) September 30, 2019 Non-GAAP (e) The adjustment primarily reflects non-cash interest expense associated with debt issuance costs Low High Medical Indication 2019 2018
Asset impairment charges $2 million $ -- ASSETS September 30, GAAP Reported $ 127,342 $ 77,656 $        7,028 $ 42,658 33% $ 8,940 $ 21,308 $        1,388 1,618 $    9,404 $(19,774) $       (10,370) $ 1,787 $(12,157) $   (0.32) GAAP Reported $ 155,054 $ 87,690 $      8,223 $ 59,141 38% $ 9,810 $ 20,588 $        1,022 369,499 $(341,778) $(21,350) $     (363,128) $(75,600) $ (287,528) $   (7.65) GAAP Adjustments Adjusted (f) The adjustment reflects the impact of tax credits and deductions relative to expected annual pre-tax income Analgesic $    1,884 $    1,829
Interest and other $70 million to $72 million, down from $71 million to $73 million $54 million to $56 million, down from $56 million to $58 million Current assets: September 30, 2019 June 30, 2019 2019 2018 Adjustments: Adjustments: Net loss $                       (12,157) Net income (loss) $    (1.0) $     6.0 Anti-Psychosis 28,034 10,889
Effective tax rate Approximately 16% to 17%, down from approximately 26% to 29% Approximately 22% to 23%, unchanged Cash and cash equivalents $                     101,008 $       140,249 Amortization of intangibles (a) - - (7,028) 7,028 - - - - 7,028 - 7,028 - 7,028 Depreciation of Fixed Assets step-up (a) - (1,335) - 1,335 - - - - 1,335 - 1,335 - 1,335 Net sales  $525 - $545  -  $525 - $545  Cardiovascular 21,606 21,770
Adjusted EBITDA* N/A $145 million to $160 million, unchanged Accounts receivable, net 173,109 164,752 Net sales $      127,342 $        155,054 Cody API business (b) - (1,722) - 1,722 (420) (214) - - 2,356 - 2,356 - 2,356 Amortization of intangibles (b) - - (8,223) 8,223 - - - - 8,223 - 8,223 - 8,223 Interest expense 19,292 Gross margin percentage approx. 33.5% to 35.5% (6.5%)  (a)  approx. 40% to 42% Interest expense 70.0 72.0 Central Nervous System 19,257 14,286
Capital expenditures $20 million to $25 million, unchanged $20 million to $25 million, unchanged Inventories 149,162 143,971 Cost of sales  77,656 87,690 Depreciation on capitalized software costs (c) - - - - - (1,058) - - 1,058 - 1,058 - 1,058 Restructuring expenses (c) - - - - - - (1,022) - 1,022 - 1,022 - 1,022 Depreciation and amortization 12,789 R&D expense  $34 - $36  -  $34 - $36  Depreciation and amortization 56.0 57.0 Endocrinology - 53,878
Prepaid income taxes 159 - Amortization of intangibles 7,028 8,223 Decommissioning of Philadelphia sites (d) - (989) - 989 - - - - 989 - 989 - 989 Asset impairment charges (d) - - - - - - - (369,499) 369,499 369,499 - 369,499 Income tax expense 1,787 SG&A expense  $69 - $72  ($6)  (b)   $63 - $66  Income taxes - 2.0 Gastrointestinal 16,962 17,594
Assets held for sale 4,637 9,671 Gross profit 42,658 59,141 Restructuring expenses (e) - - - - - - (1,388) - 1,388 - 1,388 - 1,388 Non-cash interest (e) - - - - - - - - - 4,538 4,538 - 4,538 EBITDA 21,711 Restructuring expense  $2 - $4   ($2 - $4)   (c)  - EBITDA 125.0 137.0 Infectious Disease 11,895 4,480
Other current assets 6,994 13,606 Operating expenses: Asset impairment charges (f) - - - - - - - (1,618) 1,618 - 1,618 - 1,618 Other (f) - - - - - (1,340) - - 1,340 - 1,340 - 1,340 Asset impairment charges $2 ($2)  (d)  - Migraine 9,143 9,737
Total current assets 435,069 472,249 Research and development expenses 8,940 9,810 Non-cash interest (g) - - - - - - - - - 4,008 4,008 - 4,008 Tax adjustments (g) - - - - - - - - - - - 81,504 (81,504) Share-based compensation 4,459 Interest and other  $70 - $72  ($16)  (e)   $54 - $56  Share-based compensation 9.0 10.0 Respiratory/Allergy/Cough/Cold 2,707 3,584
Property, plant and equipment, net 184,889 186,670 Selling, general, and administrative expenses 21,308 20,588 Loss on extinguishment of debt (h) - - - - - - - - - 2,145 2,145 - 2,145 Inventory write-down 3,510 Effective tax rate  approx. 16% to 17%  6%  (f)  approx. 22% to 23% Inventory write-down 7.0 8.0 Urinary 435 1,541
Intangible assets, net 427,253 411,229 Restructuring expenses 1,388 1,022 Other (i) - (208) - 208 - (2,090) - - 2,298 (966) 1,332 - 1,332 Non-GAAP Adjusted $   155,054 $  86,355 $            - $  68,699 44% $  9,810 $  19,248 $              - $           - $      39,641 $  (16,812) $           22,829 $     5,904 $      16,925 $      0.44 Asset impairment charges 1,618 Adjusted EBITDA  N/A   N/A   $145 - $160  Separation costs 1.0 1.0 Other 9,861 10,805
Goodwill - - Asset impairment charges 1,618 369,499 Tax adjustments (j) - - - - - - - - - - - 999 (999) Investment income (729) Capital expenditures  $20 - $25  -  $20 - $25  Cody API business 2.0 2.0 Contract manufacturing revenue 5,558 4,661
Operating lease assets 6,410 - Total operating expenses 33,254 400,919 (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")  Loss on extinguishment of debt 2,145 Inpairment 2.0 2.0    Net Sales $ 127,342 $ 155,054
Deferred tax assets 110,396 109,305 Operating income (loss) 9,404 (341,778) Non-GAAP Adjusted $   127,342 $  74,737 $              - $  52,605 41% $  8,520 $  17,946 $              - $           - $    26,139 $  (14,587) $           11,552 $  2,786 $     8,766 $      0.22 (b)  Relates to amortization of purchased intangible assets primarily related to the acquisitions of KUPI and Silarx Pharmaceuticals, Inc.  Other non-operating income (934) Restructuring expenses 2.0 4.0
Other assets 7,914 7,960 Other income (loss): (c)  To exclude expenses associated with the 2016 Restructuring Plan and, to a lesser extent, the Cody Restructuring Plan  Restructuring expenses 1,388 Restructuring payments (3.0) (4.0)
TOTAL ASSETS $                  1,171,931 $    1,187,413 Loss on extinguishment of debt (2,145) - (a)  To exclude amortization of purchased intangible assets primarily related to the acquisitions of KUPI and Silarx Pharmaceuticals, Inc.  (d)  To exclude asset impairment charges related to goodwill and other long-lived assets  Restructuring payments (2,536) Adjusted EBITDA (Non-GAAP) $ 145.0 $ 160.0
Investment income 729 379 (b)  To exclude the operating results of the ceased Cody API business  (e)  To exclude non-cash interest expense associated with debt issuance costs  Cody API business (a) 2,356
Interest expense (19,292) (21,433) (c)  To exclude depreciation on previously capitalized software integration costs associated with the KUPI acquisition  (f)  To primarily exclude depreciation on previously capitalized software integration costs associated with the KUPI acquisition  Decommissioning of Philadelphia sites (b) 989
LIABILITIES Other 934 (296) (d)  To exclude the costs related to the decommissioning and shutdown of the Philadelphia manufacturing and distribution sites  (g)  The tax effect of the pre-tax adjustments included at applicable tax rates  Other(c) 1,091
Current liabilities: Total other loss (19,774) (21,350) (e)  To exclude expenses associated with the Cody API Restructuring Plan  (h)  The weighted average share number for the three months ended September 30, 2018 is 37,586,327 for GAAP and 38,752,010 for the non-GAAP earnings (loss) per share calculations  Adjusted EBITDA (Non-GAAP) $                         35,068
Accounts payable $                       26,927 $         13,493 Loss before income tax (10,370) (363,128) (f)  To exclude impairment charges primarily associated with an operating lease right-of-use asset 
Accrued expenses 6,233 5,805 Income tax expense (benefit) 1,787 (75,600) (g)  To exclude non-cash interest expense associated with debt issuance costs 
Accrued payroll and payroll-related expenses 12,347 19,924 Net Loss $      (12,157) $      (287,528) (h)  To exclude the loss on extinguishment of debt primarily related to the partial repayment of outstanding Term Loan A balance 
Rebates payable 43,358 46,175 (i)  To primarily exclude accrued separation costs related to the Company's former Chief Financial Officer as well as gains on sales of assets previously held for sale 
Royalties payable 16,597 16,215 Loss per common share: (j)  To exclude the tax effect of the pre-tax adjustments included above at applicable tax rates 
Restructuring liability 1,167 2,315      Basic $            (0.32) $            (7.65) (k) The weighted average share number for the three months ended September 30, 2019 is 38,309,267 for GAAP and 40,653,053 for the non-GAAP earnings (loss) per share calculations. As a result of the 4.5% Senior Convertible Note issued on September 27, 2019, the diluted earnings per share was calculated based on the "if-converted" method.
Other current liabilties 3,652 3,652      Diluted $            (0.32) $            (7.65)
Income taxes payable - 2,198
Short-term borrowings and current portion of long-term debt 66,845 66,845 Weighted average common shares outstanding:
Current operating lease liabilities 1,932 -      Basic 38,309,267 37,586,327
Total current liabilities 179,058 176,622      Diluted 38,309,267 37,586,327
Long-term debt, net 654,432 662,203
Long-term operating lease liabilities 5,626 -
Other liabilities 14,711 14,547
TOTAL LIABILITIES 853,827 853,372
STOCKHOLDERS' EQUITY
Common stock ($0.001 par value, 100,000,000 shares authorized; 39,629,271  and 38,969,518 shares issued; 38,526,558 and 38,010,714 shares outstanding at September 30, 2019 and June 30, 2019, respectively) 40 39
Additional paid-in capital 314,645 317,023
Retained earnings 19,918 32,075
Accumulated other comprehensive loss (661) (615)
Treasury stock(1,102,713 and 958,804 shares at September 30, 2019 and June 30, 2019, respectively) (15,838) (14,481)
Total stockholders' equity 318,104 334,041
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $                  1,171,931 $    1,187,413

 

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SOURCE Lannett Company, Inc.

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