Lannett Company, Inc. (LCI) has reported a 39.56 percent plunge in profit for the quarter ended Dec. 31, 2016. The company has earned $8.17 million, or $0.22 a share in the quarter, compared with $13.52 million, or $0.36 a share for the same period last year. On the other hand, adjusted net income for the quarter stood at $34.54 million, or $0.92 a share compared with $35.42 million or $0.95 a share, a year ago.
Revenue during the quarter surged 34.54 percent to $170.94 million from $127.06 million in the previous year period. Gross margin for the quarter contracted 488 basis points over the previous year period to 51.51 percent. Total expenses were 79.93 percent of quarterly revenues, up from 76.13 percent for the same period last year. That has resulted in a contraction of 380 basis points in operating margin to 20.07 percent.
Operating income for the quarter was $34.31 million, compared with $30.32 million in the previous year period.
However, the adjusted operating income for the quarter stood at $69.27 million compared to $60.39 million in the prior year period. At the same time, adjusted operating margin contracted 701 basis points in the quarter to 40.52 percent from 47.53 percent in the last year period.
"Higher sales across a number of products and the addition of KU's operations were key drivers to the 35% increase in our fiscal 2017 second quarter net sales," said Arthur Bedrosian, chief executive officer of Lannett. "Our outlook for the current fiscal year remains strong. During the quarter, we received several product approvals and continued to make excellent progress integrating KU's operations and consolidating our manufacturing, sales, R&D and distribution functions. And more recently, we voluntarily paid down $75 million of debt, lowering our annualized cash interest expense by approximately $4 million, and our board of directors approved a plan to invest in our pain management facilities, which will significantly increase our active pharmaceutical ingredients (APIs) production and bolster our efforts to vertically integrate."
For financial year 2017, Lannett Company, Inc. expects revenue to be in the range of $675 million to $685 million and expects adjusted revenue to be in the range of $675 million to $685 million.
Working capital drops significantly
Lannett Company, Inc.. has witnessed a decline in the working capital over the last year. It stood at $332.86 million as at Dec. 31, 2016, down 27.66 percent or $127.26 million from $460.12 million on Dec. 31, 2015. Current ratio was at 2 as on Dec. 31, 2016, down from 4.13 on Dec. 31, 2015.
Cash conversion cycle (CCC) has increased to 127 days for the quarter from 114 days for the last year period. Days sales outstanding went up to 89 days for the quarter compared with 72 days for the same period last year.
Days inventory outstanding was almost stable at 72 days for the quarter, when compared with the last year period. At the same time, days payable outstanding went up to 34 days for the quarter from 30 for the same period last year.
Debt remains almost stable
Lannett Company, Inc. has recorded a decline in total debt over the last one year. It stood at $1,053.46 million as on Dec. 31, 2016, down 0.67 percent or $7.06 million from $1,060.52 million on Dec. 31, 2015. Total debt was 60.10 percent of total assets as on Dec. 31, 2016, compared with 60.51 percent on Dec. 31, 2015. Debt to equity ratio was at 1.96 as on Dec. 31, 2016, up from 1.93 as on Dec. 31, 2015. Interest coverage ratio deteriorated to 1.47 for the quarter from 2.58 for the same period last year.
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