Arthur Przybyl - CEO Charlotte Arnold - CFO

Good morning, everyone. Welcome to ANI's earnings conference call for the first quarter 2016.

My name is Art Przybyl, I am the CEO. And with me today is Charlotte Arnold, our Chief Financial Officer.

Before we begin, I want to refer everyone to the forward-looking statements language in this morning's press release and ask each of you to review it carefully as important context for this conference call. Discussions will also include certain financial measures that were not prepared in accordance with Generally Accepted Accounting Principles.

Reconciliation of those non-GAAP financial measures can be found in our earnings release dated today. Today we reported strong first quarter results as evidenced by net revenues of $20.6 million.

Adjusted non-GAAP EBITDA of $11.4 million, and adjusted non-GAAP net income per diluted share of $0.76. As a result of these reported financial metrics, we are reaffirming our updated annual guidance, annual revenues of $119 million to $134 million.

Adjusted non-GAAP EBITDA of $55 million to $63 million. And adjusted non-GAAP net income per diluted share of $3.54 to $3.91.

Our two significant business platforms; generic pharmaceutical and branded pharmaceutical products generated $13.2 million and $5.6 million in first quarter net revenues. Increases of 8% and 31% respectively over the prior year period.

In the first quarter, our cost of sales was 17%, indicative of an 83% gross margin, and we generated $11 million in positive cash flow from operations. Since the beginning of the year we have closed three transactions; the Corticotropin NDAs.

The exclusive rights to distribute the authorized generic of Lipofen and hydrocortisone one and 2.5% rectal cream, and the acquisition of the Inderal NDA. These transactions added to both, our generic and brand product portfolios, and with the exception of Corticotropin are accretive to revenue and non-GAAP EBITDA starting in the second quarter.

The acquisition of the Corticotropin NDA as a development project that has the potential to generate transformational returns upon re-commercialization. As we look to continue our revenue growth in subsequent quarters, we are forecasting the launch of seven products in the second quarter.

We have already launched three, Inderal LA, Propranolol extended release, Hydrocortisone 1 in 2.5% Rectal cream. By mid-May we expect to announce the launch of fenofibrate 50 in 150 milligram, these are the authorized generics of Lipofen, and an undisclosed authorized generic product.

In early June we expect to launch Oxycodone Capsules and our generic anti-cancer product. Of all these launches, only the generic anti-cancer product requires a formal FDA ANDA approval.

In the second half of the year we anticipate several other new products. And I refer you to our new product introduction table in today's press release.

For historical context, when we became a public company, a commercial product line consisted of a total of seven products. For us, it's noteworthy that just in the second quarter we are launching seven new products.

I want to personally thank our management team and all of our employees for their dedication and efforts as we advance our business model and strategic vision. I will now turn the conference call over to our CFO, Charlotte Arnold, who will provide you with more details on our financial results.

Thank you, Art. Good morning, everyone and thank you for joining our conference call to discuss ANI's first quarter results for 2016.

We are pleased to report that our financial performance during the quarter exceeded our expectations, enabling us to reaffirm the increased guidance we provided in early April after our acquisition of Inderal. During the first quarter of 2016, we generated net revenues of $20.6 million and adjusted non-GAAP EBITDA of $11.4 million.

Importantly, the seven generic products that we have acquired, developed and launched since November 2014 comprised approximately 25% of our generic product revenue during the quarter. During the second, third and fourth quarters of 2016, we plan to launch a further 14 generic products; three of which have already been commercialized.

We expect that the entire basket of generic products launched since November 2014 will comprise greater than 50% of our generic product revenues for all of 2016. An important diversification of our overall revenue base that enhances our competitive position in the generic marketplace and strengthens our relationships with customers.

Our adjusted non-GAAP [ph] of $0.76 was approximately $0.05 above our expectations for the quarter. While our GAAP diluted EPS also exceeded our forecast by a similar amount.

Each of these financial measures was positively impacted by higher than expected gross margins during the quarter and lower than expected operating costs. For further information regarding our first quarter results, I invite you to review the detailed comparisons we've provided in this morning's press release.

We are also pleased to confirm the following financial guidance for 2016 based on our current estimates of market shares and pricing for each of our products, our cost of sales, our operating costs, and the anticipated timing of future product launches. Net revenues for 2016, we estimate to be between $119 million and $134 million; adjusted non-GAAP EBITDA to be between $55 million and $63 million.

Adjusted non-GAAP net income diluted share to be between $3.34 -- excuse me, $3.54 and $3.91 assuming 11,489,000 weighted average shares outstanding. And GAAP diluted EPS to be between $0.30 and $0.65 per share.

Given the timing of our generic product launches, we expect that our financial performance will continue to build throughout the year as it did with our first quarter 2016 results showing growth over the fourth quarter of 2015. In conclusion, we are very pleased with our financial performance during the first quarter and look forward to continuing to execute on our business strategies in 2016.

At this point, I will turn the call back over to our President and CEO; Art Przybyl.

Thank you, Charlotte. At this time moderator we will now open the conference call to questions.

Then in closing, as you all know, this is Charlotte's last earnings conference call with me. I want to thank Charlotte for all her tireless efforts in helping advance ANI to where we are today, a successful generic and mature brand pharmaceutical business built on a strategy of driving revenue and profit growth through new product introductions, combined with a strong financial foundation of EBITDA and cash flow generation.

Charlotte will be missed by all of us. And I speak for everyone at ANI when I sincerely wish her all the best in her future endeavors.

Thank you all for attending our conference call today.