LCI - Earnings call transcript Q1 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Welcome to the Lannett Company Fiscal 2019 First Quarter Financial Results Conference Call. My name is Hilda and I will be your operator for today's call. Please note that this conference is being recorded. I will now turn the call over to Mr. Robert Jaffe, Investor Relations for Lannett. begin. may you Sir,

Robert Jaffe

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

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

the is measures including measures the Principles, to during developments be more fiscal associated addition, press other contained its Accepted course financial Accounting from will non-GAAP refer provide the in This company's results the recent well and call, and on XXXX results website. Then, detail be not fiscal as review company's News afternoon, to also Relations announcing on the Please we information website. the are measures measures earnings financial Investors as the have GAAP company's Releases financial additional XXXX including first financial companies. with initiatives. by Generally measures and accordance reasons financial guidance. section Marty non-GAAP are the In comparable can earnings quarter in different discuss company's regarding savings that found note non-GAAP earlier release U.S. Lannett's press Lannett's this financial used launches comments may on that of product in announcement. financial the its The encouraged of release to financial for will remarks non-GAAP in we for reconciliation information directly brief most under results Investor today. in issued of The Tim the company's included cost prepared

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

Timothy C. Crew

Thank you, Happy Robert. first Diwali our celebrate. In inclined and XXXX still out Good and there our for afternoon, quarter, adjusted colleagues and everyone net expectations. to friends income sales exceeded fiscal net still

are provide developments, They of the on a are call financial results Given and what these conference last details who positive increasingly the over in detail. afternoon. themes to Marty turn call. will directionally I'd recent like share to discuss to combined company's shared future. results, three Then with more I'll our we There we much the business number broad about our excited this

theme our first and our to success size, revenue. launches is The drive top significantly bottom considering accelerated product with new line

to our considering theme, second The as business. size, pipeline launches again product well our as significantly our future continue rate expanded diversify is of our

efforts third costs to The to our returns. our is reduce significant theme improve

and when renewed they're materially impact a longer the revitalized ameliorate we represent expected efforts these from Lannett collectively, Levothyroxine. and Importantly sell and no to

far theme this we to XX to sales, Clarithromycin. week year launches recently pleased drive have market Vardenafil, On the this very first products successfully new generic; a first Dronabinol of are new just and to launched including so product launched calendar and

These of a fiscal deliberate XXXX quality two are returns where projected the of of with partner currently we Collectively Clarithromycin have our only more margin to than XX to $XX gross suppliers. launches. million one and approximately Vardenafil royalties after products nature in and sales both projected XX% of For net these applicable. product speak XX%

most And will the in pace to developed higher this products, with fiscal launches products. maintain than second of approximately more product XXXX. have in-licensed tend XX be speaking, margins which generally these to expect of half internally new We of

our expanding second continue theme our rate the onto pipeline Now of to of launches. new product

XX acquired SMZ-TMP have noted total, the Dexmethylphenidate products internal includes since Today We in-licensed than here, three not we XXXX. categories FDA we ANDAs and that in approximately products launched. beginning XX more there earlier of calendar that counting have have suspension. partnered approvals or products are have This like and yet and

pending XX another FDA filed and that have We approval. the are with ANDAs

course, this includes Caffeine. is Importantly, and BAC, Butalbital, azithromycin, combination a product way thalidomide. BAC ER, the of ER, solifenacin by Acetaminophen, Methylphenidate Levofloxacin and of

substantial their These to Finally relative company, we believe teams new to a the have in the which of is and product a can impact of development course, a to Meanwhile, ongoing portfolio. our business expect negotiations products. file XX applications launches size more past. our have And active fiscal already to is year, development more fiscal of maintain over into this our R&D the teams well we our than relative products, future. in our submitted increase balance ever us number the XX over in-license ANDAs rate five this of ever in we And year. substantial recent leads in amount similar

that internal we target suspensions efforts You areas liquid our interesting have and certain dosage where as oral such forms. note development should strengths,

to accelerate positioned strengths specialized market, technologies in growth we that products and/or of Our generic capabilities. are business revenue partner development on U.S. bring and/or a we committed efforts the as focused and our complement where choice

our diversify – expect our our Of study expect FDA NDA we FY expanded pipeline And a We sales, significantly biosimilar we course be QT injection to in conclude the continues progress further progress. believe and preclinical Lantus, business future gating will work the to drive and develop while we Similarly, insulin beyond our our significant January. to streams. also continues to ANDA a all with obviously that's XXXX. by to completed efforts with clinical revenue also HEC to Numbrino partner portfolio, glargine

the As Robert be of the product pipeline and details mentioned can earlier, some company's new in found website. launch

an restructuring, XX% SG&A say relates significant be will approximately base. expense reducing our will expense proposed total reduced and that all our base. on the In affecting and of or more million API our these distribution About Virtually And changes specific total, more business. staffing I'll based portfolio XX% half changes. these of sale primarily progress than of again opportunities today fiscal our are impacted our than these our equates cost $XX approximately is by XXX and reducing XX% for expenses told, to All by annualized Cody are employees employees on basis to manufacturing theme final $XX PA ceasing by our operations, and operations, aware and third our of be savings expenses. structure. will of This redirected that our Our them. million growth be announced XXXX. of on expense into reduction

believe we well-poised now growth. While we restructuring are for can be future challenging,

increase. Importantly, spend and the of to with is of website. expected additional our ANDA-specific the re-investment we've not expense our information overall reductions, substantially reduced the R&D on cost regarding project level included some of be Again, will savings

my As we started we themes out we three are today, have in emphasizing. comments

is First, to significantly accelerated our our new launches our This have recent $XX to past. XXXX we product revenue. million FY expected to and projected transformative they're add

call and to Marty. Lannett. we diversify have significantly in to make to increasingly be us able our accelerate launches to our With renewed expanded structure Second, continuing improve product increased have new turn bottom-line. pipeline revitalized the we I future And excited investments efficiencies cost our finally, and significantly and revenue about that, over other base. our these investments Marty? the Together continue

Martin P. Galvan

Thank you, Tim and good everyone. afternoon

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

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

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

compared quarter, For prior with was period. or profit million million expenses sales or million. $XX.X compared sales of first income million the compared Income the million $XX.X with R&D prior million compared was $X.X mention expenses quarter. $X.XX XX% expense quarter for with $XX.X I'd first diluted $XX.X the or million quarter. million. for income of to with per million. the $XXX.X XXXX sales the share $XX.X Interest were $XX.X XX% the million adjusted million fiscal first net adjusted fiscal share a Operating net was million $X.X with XXXX. of $XXX.X $XX.X or GAAP XXXX tax SG&A briefly year quarter. charge $X.XX $XX.X with with first prior $XX.X net were million million in in million diluted first that with first for like compared year was compared fiscal per compared recorded $XX.X million for year we expense compared Net $XX.X was were $X.X quarter. Gross the

the assets any ability full we Cody have to totaling impact impairment debt has to disclosed result $XXX no previously to of approximately long-lived as API make our charges nor on recorded impairment of related our covenants. of This As our plan it business. does million sell payments effect on the goodwill charge and debt a Laboratories the non-cash certain

Turning to XX, than June at $XX equivalents XXXX. at cash increase million increased our by in and cash $XXX sheet, cash more XXXX, balance receipts, million September $XXX balance from to was two reported cash Philadelphia. XX, million million of sale our approximately previously September from buildings result the primarily of the in approximately refund, a timing million. XX, of was our At debt $XX XXXX, cash tax $XX and The

requirements. position, the positive We have cash will our JSP contract working reduced expiring that capital a also on anticipate impact from resulting

fund strong our through We expenditures to cash expect from capital and fiscal will business operations, XXXX. activities which generate development flows

flows debt September addition, at In sufficient liquidity we and least meet to service our XX, to XXXX. requirements expect have through cash

to expansion, revitalizing We structure provide during on to structure It but actions team capital our is to have expeditiously update product not our our this efficiencies and capital options. reductions, and board to expect be I our while evaluating believe number cost plenty priority our address time a are also an do options. only questions plant same of we in with around pipeline capital and covenants also our Along are so. financial et our still of structure. the of with are debt address cetera, period. expanding with a to we our we advisors, We launches, business want taking compliance the efforts

our to turning Now, guidance.

expense. to lastly, $XXX Adjusted XX%; a gross fiscal sales to Adjusted range XX%. of capital previous the XXXX be Adjusted R&D full of in net of from we million. in expenditures million. approximately to SG&A XX% of The year effective expense million to million. $XX $XX full million adjusted to $XX range $XX the range XXXX ranging $XX the million. and our in the net to percentage guidance million fiscal on $XX interest in expect range R&D as to $XX increases sales are expense net $XX For million and in expense margin tax rate basis, to of currently approximately to million XX% We reaffirming adjusted Adjusted sales million. the of $XXX minor year with an

earnings, from address other assumed products that This sales not any recently XX% products, phasing EPS first to first now compared increase that includes of would you and for period. the With but sales from quarters third we mid-single in second approximately quarter, with expect guidance second approved as we have. EPS and yet may like net quarter. launched we third the approved overview, quarters, quarter. adjusted the reasonably to the of regard the be to Regarding and the we expect as to quarter sequentially increase previously will quarter products, launched digits XX% second for adjusted questions the in for approximately With increase launched Operator? the to the well

Operator

you. Thank

We have a Capital from from Markets. Gary question Nachman BMO

Rafay Sardar

then color can of And out continue as This hear XX% considering the options you. something margin, Can to partnerships? for coming Thank Gary. sustainability of that to gross the is range Rafay XX% of more we you you provide on on you structure? you're any enter when talk the And about could on capital that? for range the

Martin P. Galvan

speaking. – Marty is hi, Sure. This Yeah. this is

our range on first amount time at. – of point we question options. at provided what It's this going of to in the provide a insight we're – the So, regarding looking we're

plenty have said I we of we believe As runway.

on come in in our being are to the future. I'm we and And reviewing very please the second expeditious you the repeat second or options question. Could here sorry. However, searching question? more

Rafay Sardar

Can Sure. to of talk gross XX% you margin sustainability partnerships? range XX% about enter various as the you

Martin P. Galvan

all, I calendar on impact that year, of levothyroxine of point that we've range – an we as have next gross had come margins March our the will as Stevens They contract will product. of in first down margins. in Well, Sure. a XX% out publicly. expires as said year or the next so. I'll that We've Jerome mean

so I'll will that we'll that So our million our going XXXX our – of expect the down. that see forward, guidance. or that's in And $XX ends – gross new in products as talk we contract margins to come that

expect margin in that we falls about which that to as the range some will And Stevens Jerome we're off. expect XX to as And on high impact We insight products help provide forward. expecting right of from now should coming going XXs. contract gross be is the – products mitigate what that to that

Timothy C. Crew

And I'd comments two add please. if just that on

the As year. the the increases line of versus That'll in around reflect our in cost forward. this I X our are on operating margin discussed proportion the and reductions noted half information of partner cost in or prepared much my products this and remarks, launched that we of help profile somewhat. targeted And course, X products back margin will provided call moving our internally point

Rafay Sardar

the that just I more. originally second flipping? to expected half acquired that ask if year, launch you With is this you to products of fiscal May, still or last respect And that the you. in do plan Thank Great. this see the you one Endo from can

Timothy C. Crew

That in the be still of fiscal the the should year. plan very end towards

we those location products – to was One think make of about internally for New manufacturing Carmel had looked of as at the third our York. to versus base we parties in expense some trade-offs is going the up in to

do a but not are way a fiscal they up those way up subsequent start in material one. year, So the in showing showing in material this

Rafay Sardar

Thank you.

Operator

question comes Capital. Hewitt The Matt next Craig-Hallum from from

Matthew G. Hewitt

strong taking afternoon and Good for quarter. questions thank you on and the the

the be the me, thinking a collections first of cash strong but your timing Obviously, year, should quarter is cash as given The of collections launches? I from very some about this the first how guess, timing? look from we mix contingent later out one that a here and you perspective, upon,

Martin P. Galvan

hi, Well, Yes. Matt Marty. it's

So, timing up one the we the said of the cash drove call was collections. on that the drivers of as

us of bit the a fiscal of for last Specifically XXXX. back in if the end of that that, an sales June was at you the quarter we little strong in month fiscal That's in essentially recall, item unusual had year. our

or our being our saw increasing cash sale those So September what hitting collected. in basically were is – you month, receipts that

they'll normal Going be mentioned March come capital high, that that JSP business with improvement we're business. would as million run the at one-time the no will cash ceases that unusually year. $XX product and expecting forward, reason amount track have that – think collections of in time down the the as range sales fiscal of will of benefit end in range I benefit. us when the working would But in a that by month, there course with of – associated in course, to then, of with the point line of we be our the a the overall But something then

Timothy C. Crew

earlier trying our a spend announced obviously also add, result would And Tim the We'd earnings. here, very I our themselves expense cash. that our discretionary how we're savings And in capital. to it's reduction to we to our about improving cash, thoughtful be reduction

that the in as out to ourselves trying to get we're of most So forward. comes possible as cash many the leave options move to

Matthew G. Hewitt

Understood.

Okay.

where How we us given margin thinking of that's Cody? of some reductions help going those about reductions that the Regarding conversely Just OpEx? to targeting. cost Or split Is to and understand it goods? split? you're gross should out that XX/XX benefiting between be be XX% the of cost most. coming those it's of be going

Martin P. Galvan

Yeah.

in expense. it's savings, more the Matt, So versus area, the operating manufacturing

So the thirds, million, third manufacturing. it's weighted the $XX two one about towards

Matthew G. Hewitt

Understood. Okay.

Timothy C. Crew

rather capacity our Although, is ANDA. of and the same Seymour time at than the – some of our R&D same expansion at reinvestments at the as

not our – just remember is pure But savings guess those cuts. reinvesting probably probably expense parts right. also I that So core into it's business. It's of ratio that it's

Matthew G. Hewitt

reinvestment, into And you about I'm programs. the talk when R&D that about the assuming you're talking

more So you to that submitting can get back ANDAs?

Timothy C. Crew

R&D Yes. Seymour. capacity at programs and expansion

Matthew G. Hewitt

Okay. you All much. right All right. very Thank great.

Martin P. Galvan

welcome. You're

Operator

final to remarks. show at We would management I questions no for further call to back the turn time. this like

Timothy C. Crew

our today. success close just regularly a the shout-out to our employees us a night. good sharing All right. call. I'll all forward call. at conference It's so have joining This out progress our important everyone we quick with of They're We to Tim look customers. next Have to described. and appreciation again. concludes Thanks for our scheduled

Operator

ladies participating. you you, thank Thank gentlemen. We today's conference. for concludes This and

You may now disconnect.

Lannett (LCINQ) 7 Nov 182019 Q1 Earnings call transcript