Company's Future Plans: Boosting Profitability and Share Price

2023-07-10

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Financial journalist report:

During the earnings call, Suthan Sukumar, Peter Brereton, and Mark Bentler provided key insights into the market outlook and future plans of the company. Despite uncertainties in the short-term, the management has a long-term strategy in place to boost the company's share price.

One positive development highlighted during the call was the expiration of the Lannett partnership, which is expected to have a favorable impact on profitability. The management expressed optimism about selling additional products alongside Amphetamine IR and ER, citing the success of Kirko, a product that generated double the revenue in just 12 weeks compared to a whole year with another company.

While revenue is projected to increase, the management acknowledged that profitability may be affected by higher costs in the sales and marketing department. They likened the situation to a pharmacist selling multiple products, where increased investment is necessary to drive growth.

The key drivers of the business, as outlined by the management, include a strong demand environment, investments in sales and marketing, and research and development (R&D) efforts. To further drive growth and increase the company's share price, the management plans to introduce more products, explore the possibility of selling other companies' products, increase investment in R&D, and focus on revenue growth through sales and marketing initiatives. Additionally, the CEO mentioned the company's financial self-sufficiency and expressed a desire to revise the compensation structure.

Looking ahead, the company's outlook for the quarter and year is positive. The management expressed satisfaction with the momentum across all work streams, particularly in brand plans and innovation. The North American RMO (Regional Managing Officer) is excited about growth opportunities. Improved gross margins resulting from SKU rationalization are expected to fuel initiatives in fiscal '25. The company maintained its EPS (Earnings Per Share) guidance for the first half, anticipating a decline, but expects cost easing and improved sell-in and sell-through in the second quarter. However, adjusted EPS will be impacted by growth investment spending. It was also noted that demand for air purifiers has been affected by wildfire dynamics.

In conclusion, the earnings call provided valuable insights into the company's market outlook and future plans. Despite short-term uncertainties, the management remains optimistic about long-term growth prospects through the introduction of new products, increased investment in R&D, and focused sales and marketing efforts. With the expiration of the Lannett partnership and the potential for selling other products, the company aims to improve profitability and increase its share price.