LCI - Earnings call transcript Q1 2018

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Operator

Welcome to the Lannett Company Fiscal 2018 First Quarter Financial Results Conference Call. My name is Katarina and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] Please note, that this conference is being recorded. the Company. to turn Relations Jaffe, now Lannett for will call Robert over Investor I ahead. go Please

Robert Jaffe

Thank you, fiscal afternoon today financial Katarina. Good to joining you results. discuss us for Lannett Company's XXXX quarter everyone first and thank

the and all on the is like forward-looking be Officer; of Marty statement from Executive materially Act. least available cautionary Harbor the today's the call current the or being actual for Galvan, Bedrosian, The stated information www.lannett.com. to at months discussed This and broadcast those Officer. at future, call certain live everyone reflecting Reform today information covered Lannett's provisions Financial A results on call of remind On could would Litigation include Safe under that of Arthur is Chief forecast make website. the differ are will implied. management's I Chief playback and three company's discussion aspects of company's will

course the discuss the fiscal results also afternoon, in non-GAAP we first may Then a other be financial accordance are more non-GAAP to This of Accepted review XXXX Arthur's will results measures the Investors most and the provide with for overview followed Principles In contained in GAAP press release earlier to measures addition, measures revised measures company's its press including used Accounting remarks. reconciliation announcing financial this the Lannett's U.S. prepared in encouraged non-GAAP by during financial financial the refer in brief financial different concluding its XXXX guidance, that announcement. not is reasons of call, financial quarter. will companies. detail, The the earnings Generally are measures fiscal by directly comparable to release for Marty from company's Arthur financial quarter including non-GAAP of today. company's issued

Arthur? Arthur call then for will open questions. call the that to said, turn will over now Bedrosian. I We the With

Arthur Bedrosian

and Robert afternoon Thanks, good everyone.

We today. to discuss lot have a

price begin term Lannett prejudice wholesale shortly. developments very New several will us product agreement proprietary months Application that a bear Action generic C-Topical of longer In with for Thalidomide of allow growth. past the our five market Class recent, a two to positions involving Let's a lawsuit dismissal announced received positive into filed the that turn licensing and reporting approvals, in to continue Drug some these discuss product. average detail more and XXX(b)(X) our of I'll we

quarter. net million were Regarding our with fiscal compared first million XXXX $XXX year's last sales quarter, first $XXX.X in

a that are last are earnings product from several in as we quarter sales rebounding challenges to first quarter we across we the were first off the We strong with contributors pleased in sales call, improvement preceding the current quarter. the Key in send to strong categories. the faced year year

a to Looking fiscal ahead, current previously of the number of the approved launch on-track year. we product half in are second

Importantly, the FDA site we shortages medications. patients continue disruption supply drug with customers supply prevent to on coordinating avoid and potential working and closely partners the our shortage in to important and with

that customers competitor's from previously already orders have We purchased purchase received products.

sales of it turn With increase result to a that, fiscal for I Marty? expected over As product Marty. the guidance XXXX. I'll we has launches our mentioned, revised in have anticipated just

Martin Galvan

everyone. and Thank you, Arthur good afternoon

in I earlier, non-GAAP to mentioned was the can to reconciliation numbers As release. measures. GAAP today's will of press referring non-GAAP found financial be The be

of schedule also includes indication. a our sales medical release by net earnings Our

a the adjusted financial for basis. Now results non-GAAP on

$XX.X sales XX% prior R&D were million. quarter for $XX.X the million the XXXX. sales for first million million For compared $XX.X million. expenses was quarter. sales $XXX.X with declined of Lannett with income prior was year fourth or share Operating the first million were million. with of compared income $XX.X net $XX.X net Net $XXX.X $XX.X from of quarter, first net fiscal $XX.X Gross million $X.XX $XX.X was to $X.X profit or XXXX fiscal Interest attributable XX% expenses compared SG&A million first from million quarter. million $XX.X or compared XXXX or the decreased million diluted for with year per million $XX.X fiscal expense the with per share million diluted with to quarter. $XX.X to compared $X.XX

to investment balance at $XXX.X sheet, Turning XXXX, and totaled cash, equivalents our September cash XX, securities million.

covenant million; to down make paying balance we $XXX our significant current required progress of well and We debt debt as to ratios. within remain continue

Arthur the Turning fiscal increased mentioned, now substantially expectations our as year. current we have to our for guidance;

full to in million Our to from revised million expenditures expense sales is The guidance year $XXX million. up as $XXX $XXX million interest the to the up for be capital of $XX the of million fiscal follows; of million XX%, million, fiscal from in basis unchanged. $XXX million, XXXX to on ranging $XX net million lastly, effective $XX adjusted And million. as range $XX million; adjusted $XX an $XX rate expense to million full to approximately from Adjusted down remains million. XX%, margin unchanged range adjusted million million, range $XX to to from the $XX approximately unchanged year unchanged $XX SG&A percentage to Adjusted to in million. XX% XXXX net the $XX guidance. range tax in remains previous Adjusted expense sales of at a $XX R&D $XX gross from in of

in quarters XX% for quarter sales the fourth net expect other. to second third the of the with each the be quarter. in increase with fiscal compared phasing sales Net anticipated were XXXX, and to we quarter first consistent the approximately Regarding

the remain year. first expect gross the the over in margin the of remainder We to and compared increase percentage consistent quarter second quarter with

compared increase the expenses be quarters. the over with to quarter and consistent quarter operating the next expected three are second first in addition, In

will a sales our while guidance does pending remainder, outlook product have our of include we large of back over acquisitions, potential FDA, currently possible alliances turn number Nor benefit locations As paydowns any pending not the entries from or pipeline, I these including strategic a call deep at our Arthur. or products. include strategic XX further from partners of does the sales that, to the With [ph] of a at the debt.

Arthur Bedrosian

of provide initiate new you received and the to provide I'll to from some update to Directors answer have like the of last I'd questions CEO. our Board to best our an regarding discuss I weeks. that do for search over my announcement Marty. briefly recent several Thanks

current an The As on independent firm the to new the at such my step previously in appointed, assume formally candidates. to from role full has CEO. any contract Stevens. With of disclosed, or the the expect search The term. ongoing It will CEO. strategic Board to appoint excuse is a company a position Once two a has at conversations name exists with The the appropriate through at Lannett weeks, the new discuss has the advisor no Jerome CEO the and expires a the Board new committee has vote only the with appointment spoken to Board the Member Members with advisory help year my as not time. I executive Jerome will of end senior on that separate today. vote meet continue. possibility retained further been The been though -- I and strategic independently remain Board potential full have role will a begun of has the formed Lannett's screen directors CEO. search search to down. will Board the defined I executives to Stevens and In expect initial remain a candidates the Board two role identify regards is me half to recently I Board the set of in Pharmaceuticals, recent relationship understanding with, with and [ph], about will offered. timetable

drive we manufacturing in Kremers efficiency to the production through the facility. integration from our Turning to Seymour business, back the to continue our volume regarding Indiana Pennsylvania of Urban, shift

during filed the product FDA follow second we additional quarter During to expect and transfers. we two first product quarter, the one the transfer

manufacturing Additional FDA by certifications. regards pending Paragraph the our we were currently while sales including keeping eight efficiencies have With in ANDAs, IV pipeline, XX cost to volumes. increasing steady achieved with

for by patients, is successfully. new drug This drug I'm to Phase clinical Phase Hydrochloride first the the Tablets, have approve I the their and trial FDA for to studies. approval and for XXX accomplishment prescription one very new coming seek old optimistic full our the other Delayed-Release pending submission [ph] The [indiscernible] We're the more and and C-Topical. well application in of Capsules esteem the Lansoprazole earlier, approvals supported This company's for As These as utilizes high another application studies. XXX(b)(X) multi-step were in two filing Acetaminophen October Dexmethylphenidate -- also for approvals product that received drug months. new is two Capsules, we we mentioned want FDA application product. studies separate Esomeprazole Tablets; and several the USP, pathway approvals this were X completed study X pharmacokinetic extremely September of as Delayed-Release Oxycodone efforts. Magnesium five at proud

two advanced API proposed is companies to the collaboration China's addition United Administration Group our U.S. with FDA requirements. innovative China. Food development we in HEC ATC at product development the our in that can filings, In and bioequivalence in noting, testing only agreement for of its products marketing States. aligning the through is distribution related have one XX worth to strengthen own strategy just application product pending shortage to include days. LCI of accomplished delayed APIs. available & due for FDA's of scientist China, pending XX It by China authorization by ANDA steps also opportunities marketing explored making management, distributing senior introducing and The to has indicated meeting I with to and on distribution changes list Drug to ATC products XX has Cody's delayed related drug returned and currently we Group the strengthening net has the within ATC ATC alliance that the new products and LCI ATC been ATC more from additional in-house

Nevertheless, expertise even relationship continues We we identify turning plans is to are once subsidiary and [ph]. and has with Xi a the [indiscernible] resource lines growth of that the capabilities mutual President, change reclamences ATC Jinping. to future brighter the our by opportunities announced confident be to believe China's our valuable this

Having one amended to news litigation ongoing about sales. detail company small briefly allegation we only mandate the Doxycycline meritless. drug percentage Monohydrate that, Turning on general are product allegations Lannett cannot in the Attorney manufacturers an comment complaint. complaint a of of in [ph], represents the but mentioned The the believe said the State's we

by importantly, competitors. relevant More competitive was expansion this the lost Lannett intensely to Cody Labs, marketplace demonstrated during the regards planned share market With drug that our to substantial to of beginning fact to of for construction that period construction year. and the targeted To progressing fiscal a finished, now the according our we API with fiscal completed complete project our current XXXX. expansion the structure missed building solid plan of is sealed has time summarize,

well increased like longer company's overview, may these significantly guidance to Operator? Fiscal for With to designed our company grow multiple we years one in the have. strategy XXXX any we fiscal term. now have years XXXX and may We would be advance and our continue questions over tuned. to of address strongest stay history, that you the

Operator

And our Deutsche Instructions] Greg question Bank. from first [Operator comes from Gilbert

Gregory Gilbert

a guidance I'm I afternoon. Marty sales for comment you what you have business wins quarter good the Thanks, Can on to going talk for in in new levo. factored few. your about the any and levo? start and with

Martin Galvan

-- in quarter. $XX for quarter was as keep the I levo million the run rate, think We'll

little we increase. to yet bit see expect forward, Arthur? Going

Arthur Bedrosian

orders will that receive be Quite start frankly until shipping. and we don't Greg, increase actually we what know

ahead So quarter. the currently we run but grow don't it rate get about than ourselves talking will further to we're this anticipate do for we want of

Gregory Gilbert

sticky And pretty higher is rate see temporary? do or that you run

Arthur Bedrosian

always some not to so Well, connected, got this to a of glowy it's us going it's customer going the operator? vendor a or of people to the But whether you're that's you're we're here, stay to isn't [ph] something, customer, hold is on choices. decide with Still it; sticky business. kind we've when

Operator

on Greg like looks is It line. the still

Arthur Bedrosian

hear Okay. hear we're to questions? Greg, us, Greg, did you have you follow-up if not could there. able you any

Operator

question. go to our we'll next And

We have Please BMO. ahead. go Gary Nachman from

Gary Nachman

good afternoon. Hi,

in would guidances; revenue run that increased rate What's levo? months? timing several way new most levo you when the increased were be the included of last approvals that meaningful for most more from received will the to in is be you higher would Greg, those launches Just just the specifically And guidance, the on that ones? describing the and of the

Arthur Bedrosian

Yes.

of couple there Okay, Gary. things

previous upto excuse some -- products the me, the some had As far as been products that guidance, guidance, we already new about previous is of had the XX. had number our that of long. of proven in them, now yes, X We we them new had

but products made So is but in the they amounts [ph], of approved, contribution total, these in new some are XX guidance but the of we've this well numbers. these guidance, equal, adjustments contribution of products different some had There from not in on the in money been those voiced changes timing, nature guidance. about things previous are net-net, that as to as the consistent is

far outlook, decreases and that levo players are As increases of we the we levo as also in resulting the in stronger had had amongst price at million in increase all elsewhere one is guidance the some increasing. We $XX midpoint. our the

Gary Nachman

after expected most be ones? of far or occur as to sounds level? And but sort it meaningful a and that most that of going going as there And be line to are those which Okay. in step-up then at going flat launches, you meaningful new when is XQ to to stay like the are

Arthur Bedrosian

but site are that clear except legacy finally why recently worked all --everything smaller in not most guidance these of part these main industry in products commented delayed but with -- and on we we're additional quarter. is fiscal occurring now fourth where is, product; [ph] of second a [ph] Seymour food as Philadelphia at the this front capacity the fourth our of half launching Gary, and all products in and production the -- more is the and they Exactly in yes, yet it the of the one everything driver in before, of getting as it quarter, launched, the in approved reservant -- year. we large shifting

Gary Nachman

the what Okay. Arthur, is comment and on that Stevens can? you then very visibility to could contract extent your those And Jerome on when elaborate said you discussions at briefly extended? you maybe Board if be that about And have just actually the will greater level

Arthur Bedrosian

Board discussions that the regards with for wasn't meet stick Members Styanwalk can't for I two [ph] present family. to the with Well, I the

he there previously. of was One them is Chairman Vice and

prior contract, the far so occurred expire was renewal. prior as the renewed; as the till to one I needs let's of So history -- until March be whether to renewal, next expecting one the doesn't August, of XXXX, March, of so in the year the not in contract It it so I'm renewal with an pleased any contract come us that about. frankly, about with both because about without the at the to we've good work had well. over discussion other with here company and XX only agreement Quite extraordinary Lannett, the years. of are contractually together with each very success as they working would

worked sides marriage, suspected partnerships like know, continue. will on I both good that so You a

Gary Nachman

question then And Okay. last Arthur. you for

compete that pipeline new to wins to effectively? more environment? think get high Just you guys you this combining Amneal at point? a challenging compete had to generic you level, of effectively point [ph] bigger impacts some some the in need at think you what Do at in that will really very Thanks. more recently think but do you need You've at do some scale

Arthur Bedrosian

the size grow the to product-wise skill it longer And through for matters, story. need goal, mergers, agreements. expand agrees Everybody and is the whatever so definitely, we acquisitions, that distribution is

I be than in what up think the I Paul his is recognize I Paul know so did side. but realized what is, customer company -- simply may goes independent I biased really favor the on consolidation against struggling Paul,

to valuable deal be to way the the attack the only more their that really would group. with So fight customer

end One more up and product to having valuable like to that. of grade be things is line have the more to --

that as be as that both sense strong to probably they would view, point So combined. from companies me, makes of more

three the sense, execute; it's we'll and critical However, the look back execution maybe refit to the to of the it's really narrow at example consolidation something in and When and is not to for for But XXXX know to us the the know the the would drove makes sometime, for so certainly success of you do is going future is the customers concept -- merger. down easier major than the years. combining is companies do [ph]. future because acquisition hard XX-XX off trend seen us industry, past hold going with going what to off but you've for it's this

now I So anybody is already transpired. the is at with attention future paying not looking us think

open So I are we that, discussions to think a we certainly public would like be company.

or for up in companies, not, they do new the of the to do a it to are and not position lot we're would not two but open successful there overlapping to are a make depends companies [ph]. on it in products going opportunities say merging both can you anyone We those be most guess, be ones. sense -- together, out pointed synergies more they talk does who I have

could So I that's answer way probably the that one. best

Gary Nachman

great. Thank you. Okay,

Operator

next go Matt Hewitt from ahead. our Please comes question Capital. from And Craig-Hallum

Charles Haff

this Hi, quarter Congrats Matt. on guys. the is for Charlie great on

First of question, kind to shortages. the related

press two You within shortages, release. mentioned the specifically

And speak they more to both that third that is about talk product First, product -- the a a can are of Puerto one two? bit you or then, is related you Rico? can the shortage, little HEC

Arthur Bedrosian

shortages. What prevent prevent First FDA we work the of to the is shortage. we all, with that [indiscernible] shortage, was no to being said is trying there release tend dealing to not shortages, with

to that question. that's So correct

products, no a of don't been and costing of shortage, kind signal out approval XX situation. have we has of the priority, products of so know, one reigning the one, of occasionally recently the other list; that the ATC products the is on on products one is products the one FDA get and a in was of those we that FDA that that like that the of off some that reinspected through to shortage which come -- The then you towards facility, of the products awaiting shortage them we're

after in less marketplace that now, that the more opportunities. a than product we had opportunity So product would has the go

that ones FDA. preventing been just other has one ones working the was some it there by of on real So product, shortage with

Charles Haff

Okay. now related expanded And Is any That’s contract, large to there its update guys guys helpful. relationship now that's on back previously back disclosed on, you the the contract. then you customers large have have there further?

Arthur Bedrosian

[indiscernible] contract back. which never think million. lastly came $XX Actually, that obviously they I the - was

grow what me business I I going request with expect we quotations isn’t sit stay more know more So, let as but factual, is out. to for do that close, there more here. movement further

relation strong our personal - that on market So, we a is businesses do the basis. pricing and very share. But

that net. take the out say. We’re market of profits the not chasing We per share for

So sometimes we in try scores. do more of that space in the not process we with We fit are be opportunities given our opportunities, competitors. but to most find than the profitable our

So in anytime grow not because to volume, it's we chosen after we've those opportunities. don't chase

So, on both we but it’s other, each balance need our both a kind for businesses We have needs own sides. well. of don’t as

Charles Haff

you. Thank Okay.

Arthur Bedrosian

You are welcome.

Operator

comes Finkelstein Please Susquehanna. question next from from Our ahead. Andrew go

Andrew Finkelstein

approvals Hi, taking for was even FDA, and manufacture talk to trying could good bit thanks hoping to of difficult more in question. the the levothyroxine for relation some evening accelerate I more a to you about you then, about that you durable know and how view sumatriptan you competition where maybe? and opportunity possibility improved the more market how could if the of you talk you has think position products there? more your secondly And

Arthur Bedrosian

no or Yes, is that’s to products. competition of the the In is accomplish go they approve to of are eliminate let’s case shortages a What know to problem. within trying FDA policy have FDA difficulty FDA. going I sodium really levothyroxine don’t with lack marketplace. of potential any to

three stream competitors brand supplying my the market issue market. X so the and the aside the are Putting You for don't the that know FDA as five as other on the and in only brands the us product of of product. side, Lannett commerce, far we still on side generic certainly competitor for of on generic Mylan capable of to generic like with approval inventory got companies sit one for in accelerate marketplace of market, that constantly three companies have reason the on so the in I my

think sixth they’ve criticism one general, August there product market any is really existing an And look already FDA the generic been those that that marketplace. products it are the enroll, particular and on major and as that and because can to criticized is complaint seventh approvals are for is drug. they that coming So, generic or generic, the eighth trying approvals We'll not get respecting and like yes that as in it's in a the that. I through on that's to need then doing FDA changes not making up well fix what market no soon take in

The of few case It’s go other when generic ago of our authorized the drops first we first became one after this request [ph]. market years to are we out, drug. generic generic to for the decided say, We to product. in this the a hard particular this competitor

only with withdrawal shortages the out flood and and market generic that work closely We’re major not shortages. that generic possibly with to of and hoarding realizing first there story size case market generic involved available FDA are has marketplace. temporarily in the control on turned be short which in I’d the we’re the authorized supply we recently the minimize we'd the to product the and one isn't FDA say the of still just we’ve be the to - with of it’s reasons is our the no One factors other market to

exacerbating shouldn't be warehouse know shortage huge there in So, situation a who people we when place one. don't material why orders thereby

an sales we've in the continue we increase that the there the that only we’re to generic for is in So, enjoy fact product. and seen product now

Andrew Finkelstein

the And visibility do you're where only any the timeline you have on product?

Arthur Bedrosian

releases their customers, competitors to No. thinking we Because it customer are they out don't a the their that for to about year. I be market their my to expect from heard in memorandum know

Andrew Finkelstein

Great. very much. Thank you

Arthur Bedrosian

you. Thank Okay.

Operator

ROTH question comes Scott from Henry And our Please from Capital. go ahead. next

Scott Henry

that Good you growth taking Martin, I hear XX% in Hi. thank and expect correct QX? for afternoon revenue the sequential questions. did you you

Martin Galvan

Scott. correct That’s Correct.

Scott Henry

a mean of chunk So, revenues. I good that’s

question chunk. that's expect just a where And million. mean big not show that's that's I those I $XX up, mean think I to is to little you yes, my a $XX do million bit

Martin Galvan

main levothyroxine. of a talking have are across said well. been we’ve we improving. waiting several towards that There are Yes, There's a products But like board our about - the several really. of that. It’s Things being bit products.

see We quarter, the some going the were mean are improvements. larger seeing strength some those second We over there. I so into increase couple of

So yes is towards products, approval. it’s several waiting the but there

Scott Henry

Okay. think then expect when the And run are numbers consistent QX in to and a the step year, you second and kind of of fourth I actually it in slight I somewhat I half quarter. erode like it benefits imagine up some one-time these the the sounds but decline they in of

Martin Galvan

hard don’t tell Fourth say been know, just we just always don’t cannot beyond clearly quarter is somewhat conservative early. see yet. We in know. that as We be to now and into we predicted quarter, outlooks trying what can our but we second our we right to have

Scott Henry

Sounds things going well. like are

Martin Galvan

be is there put that Yes, I’ll if going way. it to surprises.

Scott Henry

Yes. forward? a from things base Factor a at of down. do that Should this kind -- you When modeling And lot or I well. are going a I line going that think new just that that of dropped to is standpoint. again look rebound expect

Martin Galvan

some Well that competition -- we product there. is that seeing and that are

it's So a sense. to off dropping probably more that makes run rate

Scott Henry

Thank And from Obviously on jumped nice to the Sumatriptan we realize QX in think QX. can I tailwind. category go that a far how is about then significantly that How migraine, Okay. you. QX. and should migraine

Sounds step like there up. is another

Arthur Bedrosian

giving is politician country. everybody this Well, headache in

Scott Henry

you question, down a did drove expense took just Okay. a Alright I notice the What the guidance? guys. And guidance. expense guess lower interest final I interest

Martin Galvan

was you revolver quarter quarter that. and the have in also basis quarter. piece had in as revolver had bit quarter-on-quarter it each don’t and back going the $X.X of now the that Well, benefit obviously. that’s that a in last and XX right we little earlier be year last the prior that place terms of we that not And like first call, That’s that’s the in a is a in the where in quarter pull the quarter guidance then in - this on saw of in million there thinking recall we points we’re to increase the

Scott Henry

you Thank great. taking Congratulation. quarter. for Okay the

Andrew Finkelstein

Scott. you, Thank

Operator

Please from go Elliot question our from ahead. James. Wilbur comes And next Raymond

Unidentified Analyst

this Elliot guys, you Lucas for in is for questions. Hi thank taking Lee and my

experienced price on negotiating first matter? I what during you're I The Thank alluded you've question is maybe of that with Did last during this to was provide missed And any quarter? UCB the secondly, have you. but you their you it products. update erosion quarter acquire two the

Arthur Bedrosian

Marty's looking first Well, at the question.

one You know, is? it which

Martin Galvan

I'm that quarter, that's Yes. -- million year's or in and up year's the $XX to down was quarter about compared -- $X so $X first The sorry, so probably million priced; we about are quarter. about million pricing versus last last

Arthur Bedrosian

transaction, having and regards the didn't only a question, drugs like is UCB. forward problem drug concept of all and The companies. global litigation brands the really It part on but with ourselves during since from second brands us that UCB negative of stopped in because products schedule those the going [ph] then With brand those for here wall. upfront indication idea ahead in a this but schedule MRI there is against to seem not real the your capital both were evolve that two the prudent to already go and two country buy the

we So back choose to away.

to codon used from next tie an schedule a declining went them to One know as generics which revenue two, as [indiscernible] three that in that out ingredient and was as a brand, schedule that there. already as was are you the of to well product so as

with. controlled integrated completely with have some of brands familiar of the focus the really this because changing we they not what's don't, drugs, fact time can to space. in on till kind some in and see start but our vertically We're we're world the them educating lots within still if if that jump that are not those going field, and of in So best product two history they the buy that

hesitation. some has that So

to So at the moment those two we've turned down opportunity buy products. the

Unidentified Analyst

Thank you.

Operator

question Gilbert Greg next from go ahead. Bank. our comes Deutsche Please from And

Gregory Gilbert

what there guys, phone. my not happened I'm Sorry with sure

your from you in Arthur, some is first off as or think whether quarters? question Arthur, for my colleagues how about you the understanding guidance. have and you business did coming did, same did second passed? when in Do base I question. better they expect plan they get now you can to pressure pricing stuff the your they roughly on covered and announced Board what's That's levo that talk stay the better my or has discussion the and Thanks. well. And you now why they a time worse

Arthur Bedrosian

on back September me that share. start we're of business the March to I'm generally against to in a crisis market of let now anybody are to believe doesn't price I upgrade want thousands the in the speaking, what this do, which light and the started ridiculous people see going requirements that. of question send in I My on is meet are to drugs to people of continue has our depends raising facilities, anti-price that But prices We that to us the that first. Okay, nature our where grab marketplace, phenomenon, FDA me hundreds raise to more new your to some do where see money competitive say continue you examples operations to there, with actually lot cannot of generic they're to don't prices by us out the a which stayed some facility. rebound if think products. requires starting that putting in than wants and come take same down, changes of in market the then XXXX, prediction mean you're not on that

you think increases coming I but find to back. price increases, modest So more you're those going price see will

profit up also for profit the The the customer making three the have PBM's lower noticing On as opportunity negotiated once hand, them. that merchandise, example. the the goods to concerned you negotiate for they the the of that on with the the the the work marking margins They seem they and about also customers. major buy lower the companies, base, margins of other have margin insurance you're they on erosion they And between prices manufacturers, well this don't because be luxury buy.

things And within Most generic new they're space scrutiny So has you lot people being a of have of a when that. upgrade affords the facility, drug place. are all no increases that really products aberration thousand covering and the versus few there's the this punished out increases operations, these in modest. price first who increases the that overhead, like state-of-the-art. It's salaries, are

don't particular think going you're see to there. I change So any

dispute. information between Board's I It's that the can The at board tougher second we've dispute Urban, bit the there's The one acquire part motivated myself Kremers of tell a as Everything no approved. were could There's the you the give vote no really I time and done to any acquisition, to don't Lannett, members. was any any board you what of I because directional your certainly at little that Board. have members. question. X there

the approved The other X acquisition.

So related there's we've to I'm trying in. everybody's gotten questions acquisition. cover nothing to that

this one. on So if me I'm excuse long-winded

board the So probably certainly that for concern my I think some age of members. is just the a --

for have my or to you as that you I replacing either still a as member person, some there XX for that is any whether As of as disagree, a know, act of am, turn I be don't planning. But me, addressed. fortunately, about that And leave you'd if nevertheless, factors. they well those month. situation I want difficult look And younger, -- unless going company. very But don't the I to some look in myself, to I'm my more age do probably It to years I next which are succession didn't may talking importantly, XX but the and hope. means sitting has you're age XXXX, board I think

for might the it and the to acceleration with difference was versus in thing waiting board original someone did the back go address to like bringing is, in So not, that searching whether planning I ahead a or right until XXXX say only of plan. opinion The it. -- have President now of I the you

get that I that, knowledge was a point. here. a I if out was real to replaced that be candidates really Board see more from they'd at there Aside going felt there difference The don't some

-- that So would given they come that there's the you fill forward get the that give answer haven't me an in to kind as directly. the capable opportunity an answers I hope that trying more maybe candidates for members of solicited. People who to here, because can I and people are we'll questions Board I'm could best that best. being of know opposed

So reading tea bit leaves here. I'm little a the of

Operator

next Finkelstein our Susquehanna. And from comes from Andrew question

Andrew Finkelstein

I margin the given case? you the think products? guidance into is gross gross you is are products, would have little hoping average. margin, not Or the the What the Is pricing dynamics some bit some volume unchanged. just of could other was balancing about there? margin on extra pressure I above gross a went But additional the on that talk guidance

Martin Galvan

I would a own question Andrew, those answering it's both say, degree. things. your I Actually, to think, you're

[indiscernible] speaking, sales decrease, that's down ongoing the is for heading in that opposite products. do higher-margin generally increases in most we're a direction. the the yes, the So an the they're, our just and coming we price also The trend expect in part, guidance, to, we're But showing marketplace.

have some working we also that So numbers. into of our

Arthur Bedrosian

look to our we raise line. make our at look certainly the products New on do on section. do products. York products don't And prices As occasionally, look we Times our you business They at product know, costing. and individual at our we continue But

have processes more are moving at changes, making here that upgrading facility, into another because have to We to some moving another you're the we Road be modern, facilities. of State

upgrade All the You -- the processes. and bring sometimes. cost things those

we're on So -- here reacting profitable the line we just to as share. raise sure there same [indiscernible] it aggressive prices time, be. competitors and we or of items could At is of additional where also our out the market looking all might have there customer as product more competition some make for

Operator

closing the have we management call for questions. back I no will that, remarks. to with turn And further now

Arthur Bedrosian

speaking quarter. to want to look I Well, in to and joining for today's Okay. call, everybody you thank forward another

everyone. you, thank So

Operator

and today's ladies may disconnect. concludes conference. now and for you This gentlemen. you, Thank Thank participating, you

Lannett (LCINQ) 6 Nov 172018 Q1 Earnings call transcript