PHILADELPHIA--(BUSINESS WIRE)--Lannett Company, Inc. (NYSE AMEX: LCI) today reported financial results for the fiscal 2011 second quarter and first six months ended December 31, 2010.
For the second quarter of fiscal 2011, net sales rose to $30.0 million, compared with $28.7 million for the second quarter of fiscal 2010. Gross profit increased to $8.4 million from $8.1 million for the same period in the prior year. Research and development expenses decreased to $1.7 million from $2.7 million in the fiscal 2010 second quarter. Selling, general and administrative (SG&A) expenses declined to $2.9 million from $4.0 million in the same quarter of the prior year. Operating income climbed to $3.8 million from $1.3 million in the fiscal 2010 second quarter. Net income attributable to Lannett Company was $2.4 million, or $0.09 per diluted share, compared with $55,000, or $0.00 per diluted share, for the prior year second quarter.
In December, the company completed a secondary offering of its common stock for a total of 3,250,000 shares, with net proceeds of approximately $14.9 million. The additional shares issued did not have a significant impact on weighted shares outstanding due to the timing of the offering.
“Our financial performance in the fiscal 2011 second quarter was driven by higher sales of certain key products, notably Oxycodone HCI Oral Solution, Levothyroxine Sodium Tablets, and OB Natal® One Tablets, as well as lower operating expenses,” said Arthur Bedrosian, president and chief executive officer of Lannett. “We continue to be impacted by a dearth of product approvals, due to the FDA backlog. We believe, however, that several drug applications, including our New Drug Application for Morphine Sulfate Oral Solution, will soon be approved, subject to a positive facility inspection by the FDA, which is expected to be completed shortly.”
For the first six months of fiscal 2011, net sales were $55.4 million compared with $60.2 million for the comparable period of fiscal 2010. Gross profit was $14.3 million, compared with $19.6 million for the same period in the prior year. R&D expenses decreased to $3.7 million from $5.8 million in the first half of fiscal 2010. SG&A expenses decreased to $7.5 million from $7.8 million in the same period of the prior year. Net income attributable to Lannett Company was $1.9 million, or $0.08 per diluted share, compared with $2.9 million, or $0.12 per diluted share, for the first half of the prior year.
Conference Call Information and Forward-Looking Statements
Later today, the company will host a conference call at 4:30 p.m. EST to review its results of operations for the 2011 fiscal second quarter ended December 31, 2010. The conference call will be available to interested parties by dialing 888-771-4371 from the U.S. or Canada, or 847-585-4405 from international locations, passcode 28870675. The conference call will also be available through a live audio Internet broadcast at www.lannett.com. The call will be archived and accessible at this site for at least three months.
Discussion during the conference call may include forward-looking statements regarding such topics as, but not limited to, the company’s financial status and performance and regulatory and operational developments, and any comments the company may make about its future plans or prospects in response to questions from participants on the conference call.
About Lannett Company, Inc.:
Lannett Company, founded in 1942, develops, manufactures, packages, markets and distributes generic pharmaceutical products for a wide range of indications. For more information, visit the company’s website at www.lannett.com.
This news release contains certain statements of a forward-looking nature relating to future events or future business performance. Any such statements, including, but not limited to, the expected positive FDA inspection results of the company’s manufacturing facility and product approvals, including the company’s New Drug Application for Morphine Sulfate Oral Solution, whether expressed or implied, are subject to risks and uncertainties which can cause actual results to differ materially from those currently anticipated due to a number of factors which include, but are not limited to, the difficulty in predicting the timing or outcome of FDA or other regulatory approvals or actions, the ability to successfully commercialize products upon approval, Lannett’s estimated or anticipated future financial results, future inventory levels, future competition or pricing, future levels of operating expenses, product development efforts or performance, and other risk factors discussed in the company’s Form 10-K and other documents filed with the Securities and Exchange Commission from time to time. These forward-looking statements represent the company's judgment as of the date of this news release. The company disclaims any intent or obligation to update these forward-looking statements.
FINANCIAL TABLES FOLLOW
| LANNETT COMPANY, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | |||||||||||||||||||||||||||
| Three months ended | Six months ended | ||||||||||||||||||||||||||
| December 31, | December 31, | ||||||||||||||||||||||||||
| 2010 | 2009 | 2010 | 2009 | ||||||||||||||||||||||||
| Net sales | $ | 30,039,257 | $ | 28,716,713 | $ | 55,435,184 | $ | 60,151,702 | |||||||||||||||||||
| Cost of sales | 21,669,746 | 19,892,781 | 40,569,794 | 38,905,099 | |||||||||||||||||||||||
| Amortization of intangible assets | 473,456 | 448,666 | 922,123 | 897,333 | |||||||||||||||||||||||
| Product royalties | (460,631 | ) | 298,288 | (317,360 | ) | 738,062 | |||||||||||||||||||||
| Gross profit | 8,356,686 | 8,076,978 | 14,260,627 | 19,611,208 | |||||||||||||||||||||||
| Research and development expenses | 1,660,711 | 2,730,112 | 3,703,080 | 5,757,953 | |||||||||||||||||||||||
| Selling, general, and administrative expenses | 2,874,879 | 4,049,391 | 7,475,560 | 7,812,552 | |||||||||||||||||||||||
| Gain on sale of investments | (2,124 | ) | - | (14,765 | ) | - | |||||||||||||||||||||
| Gain on sale of assets | (1,266 | ) | (235 | ) | (1,266 | ) | (235 | ) | |||||||||||||||||||
| Operating income | 3,824,486 | 1,297,710 | 3,098,018 | 6,040,938 | |||||||||||||||||||||||
| Other income (expense): | |||||||||||||||||||||||||||
| Foreign currency gain | 1,550 | 708 | 3,965 | 708 | |||||||||||||||||||||||
| Interest income | 3,877 | 21,184 | 15,108 | 44,283 | |||||||||||||||||||||||
| Interest expense | (76,008 | ) | (84,091 | ) | (146,852 | ) | (154,504 | ) | |||||||||||||||||||
| (70,581 | ) | (62,199 | ) | (127,779 | ) | (109,513 | ) | ||||||||||||||||||||
| Income before income tax expense | 3,753,905 | 1,235,511 | 2,970,239 | 5,931,425 | |||||||||||||||||||||||
| Income tax expense | 1,393,909 | 1,169,996 | 1,004,365 | 2,997,646 | |||||||||||||||||||||||
| Net income | 2,359,996 | 65,515 | 1,965,874 | 2,933,779 | |||||||||||||||||||||||
| Less net income attributable to noncontrolling interest | (6,842 | ) | (10,923 | ) | (16,281 | ) | (21,817 | ) | |||||||||||||||||||
| Net income attributable to Lannett Company, Inc. | $ | 2,353,154 | $ | 54,592 | $ | 1,949,593 | $ | 2,911,962 | |||||||||||||||||||
| Earnings per common share - Lannett Company, Inc.: | |||||||||||||||||||||||||||
| Basic | $ | 0.09 | $ | 0.00 | $ | 0.08 | $ | 0.12 | |||||||||||||||||||
| Diluted | $ | 0.09 | $ | 0.00 | $ | 0.08 | $ | 0.12 | |||||||||||||||||||
| Weighted average number of shares outstanding: | |||||||||||||||||||||||||||
| Basic | 25,420,474 | 24,713,006 | 25,160,002 | 24,623,284 | |||||||||||||||||||||||
| Diluted | 25,773,609 | 25,207,764 | 25,510,792 | 25,152,455 | |||||||||||||||||||||||
| LANNETT COMPANY, INC. AND SUBSIDIARIES | ||||||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||||||||
| (Unaudited) | ||||||||||||||
| December 31, 2010 | June 30, 2010 | |||||||||||||
|
ASSETS |
||||||||||||||
| Current Assets | ||||||||||||||
| Cash and cash equivalents | $ | 23,217,833 | $ | 21,895,648 | ||||||||||
| Investment securities - available for sale | 211,453 | 604,464 | ||||||||||||
| Trade accounts receivable (net of allowance of $123,363 and $123,192, respectively) | 35,304,624 | 38,324,258 | ||||||||||||
| Inventories, net | 21,404,083 | 19,056,868 | ||||||||||||
| Interest receivable | 9,289 | 9,631 | ||||||||||||
| Prepaid taxes | 532,366 | - | ||||||||||||
| Deferred tax assets | 4,671,725 | 5,337,391 | ||||||||||||
| Other current assets | 2,491,071 | 2,506,114 | ||||||||||||
| Total Current Assets | 87,842,444 | 87,734,374 | ||||||||||||
| Property, plant and equipment | 53,312,268 | 50,160,114 | ||||||||||||
| Less accumulated depreciation | (22,938,544 | ) | (21,531,845 | ) | ||||||||||
| 30,373,724 | 28,628,269 | |||||||||||||
| Construction in progress | 3,896,439 | 2,939,898 | ||||||||||||
| Investment securities - available for sale | 182,939 | 183,742 | ||||||||||||
| Intangible assets (product rights) - net of accumulated amortization | 6,863,175 | 7,785,298 | ||||||||||||
| Deferred tax assets | 11,513,691 | 12,544,330 | ||||||||||||
| Other assets | 129,830 | 147,886 | ||||||||||||
| Total Assets | $ | 140,802,242 | $ | 139,963,797 | ||||||||||
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
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|
LIABILITIES |
||||||||||||||
| Current Liabilities | ||||||||||||||
| Accounts payable | $ | 14,308,432 | $ | 16,280,675 | ||||||||||
| Accrued expenses | 1,135,201 | 3,464,181 | ||||||||||||
| Accrued payroll and payroll related | 915,469 | 6,304,465 | ||||||||||||
| Income taxes payable | - | 1,479,658 | ||||||||||||
| Current portion of long-term debt | 303,598 | 4,851,278 | ||||||||||||
| Rebates, chargebacks and returns payable | 14,033,892 | 15,249,412 | ||||||||||||
| Total Current Liabilities | 30,696,592 | 47,629,669 | ||||||||||||
| Long-term debt, less current portion | 2,773,547 | 2,868,549 | ||||||||||||
| Unearned grant funds | 500,000 | 500,000 | ||||||||||||
| Other long-term liabilities | 5,135 | 7,864 | ||||||||||||
| Total Liabilities | 33,975,274 | 51,006,082 | ||||||||||||
| Commitment and Contingencies | - | - | ||||||||||||
|
SHAREHOLDERS' EQUITY |
||||||||||||||
| Common stock - authorized 50,000,000 shares, par value $0.001; | ||||||||||||||
| issued and outstanding, 28,330,933 and 24,882,123 shares, respectively | 28,331 | 24,882 | ||||||||||||
| Additional paid in capital | 95,993,352 | 79,862,940 | ||||||||||||
| Retained earnings | 11,514,225 | 9,564,632 | ||||||||||||
| Noncontrolling interest | 118,263 | 111,982 | ||||||||||||
| Accumulated other comprehensive income | 45,100 | 44,692 | ||||||||||||
| 107,699,271 | 89,609,128 | |||||||||||||
| Less: Treasury stock at cost - 156,611 and 110,108 shares, respectively | (872,303 | ) | (651,413 | ) | ||||||||||
| TOTAL SHAREHOLDERS' EQUITY | 106,826,968 | 88,957,715 | ||||||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 140,802,242 | $ | 139,963,797 | ||||||||||