PHILADELPHIA, May 6, 2019 /PRNewswire/ -- Lannett Company, Inc. (NYSE: LCI) today reported financial results for its fiscal 2019 third quarter ended March 31, 2019.
"Our solid third quarter financial results reflect continued growth of our core business," said Tim Crew, chief executive officer of Lannett. "Excluding sales of Levothyroxine, net sales have progressed from $101 million to $105 million to $118 million in the first, second and third quarters, respectively, representing 17% growth from the first to the third quarter. This growth has largely been fueled by the launch of new products, while maintaining our base business.
"We remain quite positive about our progress and outlook. During March, we purchased approximately $24 million of our Term Loans in open market transactions, and still had more than $200 million in cash at quarter end. Our cost reduction program is nearly complete and we expect to enter fiscal 2020 positioned with a cost structure approximately $33 million lower than the recent past. And, with our ongoing investment in product development, combined with our product acquisition efforts, we expect to continue to both augment our offering and replenish our pipeline. Our ongoing goal is to add approximately $75 million of new product revenues annually."
For the fiscal 2019 third quarter, on a GAAP basis, net sales were $172.8 million compared with $174.4 million for the third quarter of fiscal 2018. Gross profit was $65.3 million, or 38% of total net sales, compared with $67.1 million, or 38% of total net sales. Research and development (R&D) expenses were $9.8 million compared with $2.7 million for the fiscal 2018 third quarter. Selling, general and administrative (SG&A) expenses were $21.6 million compared with $14.1 million. Restructuring expenses were $0.5 million compared with $1.4 million. Operating income was $33.4 million compared with $33.3 million. Interest expense decreased to $21.5 million from $22.8 million for the third quarter of fiscal 2018. Net income was $10.6 million, or $0.27 per diluted share, compared with $12.8 million, or $0.33 per diluted share, for the fiscal 2018 third quarter.
For the fiscal 2019 third quarter reported on a Non-GAAP basis, net sales were $172.8 million compared with $174.4 million for the third quarter of fiscal 2018. Adjusted gross profit was $77.0 million, or 45% of adjusted net sales, compared with $76.7 million, or 44% of adjusted net sales, for the prior-year third quarter. Adjusted R&D expenses were $9.1 million compared with $2.7 million. Adjusted SG&A expenses were $17.5 million compared with $14.1 million. Adjusted operating income was $50.4 million compared with $59.8 million for the prior-year third quarter. Adjusted interest expense was $17.0 million compared with $16.2 million for the third quarter of fiscal 2018. Adjusted net income was $26.6 million, or $0.68 per diluted share, compared with $30.5 million, or $0.80 per diluted share, for the fiscal 2018 third quarter.
Guidance for Fiscal 2019
Based on its current outlook, the company has raised its estimates, as follows:
Conference Call Information and Forward-Looking Statements
Later today, the company will host a conference call at 4:30 p.m. ET to review its results of operations for its fiscal 2019 third quarter ended March 31, 2019. The conference call will be available to interested parties by dialing 877-261-8992 from the U.S. or Canada, or 847-619-6548 from international locations, passcode 48589492. 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 Measures
This news release contains references to Non-GAAP financial measures, 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. 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) acquisition and integration-related expenses, (3) non-cash interest expense, as well as (4) certain other items considered unusual or non-recurring in nature.
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 launching and commercializing recently acquired and previously approved products, adding approximately $75 million of new revenues annually, achieving expected savings from the cost reduction program, successfully consummating transactions with new and existing alliance partners and successfully launching and commercializing products included therein, and achieving the financial metrics stated in the company's guidance for fiscal 2019, 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.
FINANCIAL SCHEDULES FOLLOW
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SOURCE Lannett Company, Inc.