Emergent BioSolutions Reports First Quarter 2016 Financial Results
- Q1 2016 financial performance in line with guidance
- CDC notifies the Company of its intent to award a follow-on BioThrax procurement contract on
October 1, 2016 - In transitioning to the follow-on contract, the Company is temporarily postponing its 2016 financial guidance until CDC confirms level of Q2 and Q3 BioThrax procurement
Q1 2016 FINANCIAL HIGHLIGHTS
- Total revenues of
$111.0 million - GAAP net income of
$4.0 million , or$0.10 per diluted share - Adjusted net income of
$7.5 million , or$0.16 per diluted share - EBITDA of
$17.3 million , or$0.36 per diluted share - Adjusted EBITDA of
$19.6 million , or$0.40 per diluted share
RECENT BUSINESS ACCOMPLISHMENTS
Centers for Disease Control and Prevention (CDC) confirmed intent to award a follow-on procurement contract for BioThrax® (Anthrax Vaccine Adsorbed) onOctober 1, 2016 - Supplemental Biologics License Application (sBLA) for Building 55 licensure submitted to the
Food and Drug Administration - Form 10 filed with the
Securities and Exchange Commission to advance the Company’s spin-off of Aptevo Therapeutics - Emergard™ (military-grade auto-injector device) selected by the
U.S. Department of Defense and Battelle as a platform for nerve agent antidote delivery - RSDL® (Reactive Skin Decontamination Lotion Kit) for removal and neutralization of chemical warfare agents approved in
Israel
“We achieved strong first quarter financial results and accomplished key operational goals, including submitting the sBLA for Building 55, our large-scale BioThrax manufacturing facility, and filing the Form 10 to advance our spin-off of Aptevo Therapeutics,” said
UPDATE ON CDC BIOTHRAX PROCUREMENT CONTRACT
By letter dated
In its
Until such time as the Company can secure greater clarity on the number of BioThrax doses to be delivered in Q2 and Q3, expected within the next 60 days, the Company believes it is prudent to temporarily postpone its financial guidance for 2016.
2016 FINANCIAL PERFORMANCE
(I) Quarter Ended
Revenues
Product Sales
For Q1 2016, product sales were
| (in millions) | Three Months Ended | ||||||||
| March 31, | |||||||||
| 2016 | 2015 | % Change | |||||||
| Product Sales | |||||||||
| BioThrax® | $ | 59.10 | $ | -- | NA | % | |||
| Other Biodefense | $ | 4.70 | $ | 12.00 | (61 | )% | |||
| Total Biodefense | $ | 63.80 | $ | 12.00 | 433 | % | |||
| Total Aptevo Products | $ | 7.90 | $ | 6.30 | 26 | % | |||
| Total Product Sales | $ | 71.70 | $ | 18.30 | 292 | % | |||
Contract Manufacturing
For Q1 2016, revenue from the Company’s contract manufacturing operations was
Contracts, Grants and Collaborations
For Q1 2016, contracts, grants and collaborations revenue was
Operating Expenses
Cost of Product Sales and Contract Manufacturing
For Q1 2016, cost of product sales and contract manufacturing was
Research and Development
For Q1 2016, gross research and development (R&D) expenses were
For Q1 2016, net R&D expenses were
| (in millions) | Three Months Ended March 31, |
||||||||
| 2016 | 2015 | % Change | |||||||
| Research and Development Expenses (Gross) | $ | 34.2 | $ | 38.7 | (12 | )% | |||
| Adjustments: | |||||||||
| Contracts, grants and collaborations revenues | 31.7 | 33.1 | (4 | )% | |||||
| Net Research and Development Expenses | $ | 2.4 | $ | 5.6 | (56 | )% | |||
Selling, General and Administrative
For Q1 2016, selling, general and administrative expenses were
Net Income
For Q1 2016, GAAP net income was
RECONCILIATION OF GAAP NET INCOME/(LOSS) TO ADJUSTED NET INCOME/(LOSS), EBITDA AND ADJUSTED EBITDA
This press release contains three financial measures (Adjusted Net Income/(Loss), EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization), and adjusted EBITDA) that are considered “non-GAAP” financial measures under applicable
The determination of the amounts that are excluded from these non-GAAP financial measures are a matter of management judgment and depend upon, among other factors, the nature of the underlying expense or income amounts. Because non-GAAP financial measures exclude the effect of items that will increase or decrease the Company’s reported results of operations, management strongly encourages investors to review the Company’s consolidated financial statements and publicly filed reports in their entirety.
Reconciliation of GAAP Net Income/(Loss) to Adjusted Net Income/(Loss)
| (in millions, except per share value) | Three Months Ended March 31, | ||||||
| 2016 | 2015 | Source | |||||
| GAAP Net Income/(Loss) | $ | 4.0 | $ | (21.5 | ) | NA | |
| Adjustments: | |||||||
| Spin-off and acquisition-related costs (transaction & integration) | 2.3 | 1.1 | SG&A | ||||
| Non-cash amortization charges | 2.7 | 2.6 | COGS, SG&A, Other Income |
||||
| Impact of purchase accounting on inventory step-up | - | 0.1 | SG&A | ||||
| Tax effect | (1.5 | ) | (1.1 | ) | NA | ||
| Total Adjustments | 3.5 | 2.7 | NA | ||||
| Adjusted Net Income/(Loss) Adjusted Net Income/(Loss) per Diluted Share |
$ $ |
7.5 0.16 |
$ $ |
(18.8 (0.50 |
) ) |
NA | |
Reconciliation of GAAP Net Income/(Loss) to EBITDA and Adjusted EBITDA
| (in millions, except per share value) | Three Months Ended March 31, |
|||||
| 2016 | 2015 | |||||
| GAAP Net Income/(Loss) | $ | 4.0 | $ | (21.5 | ) | |
| Adjustments: | ||||||
| + Depreciation & Amortization | 8.5 | 8.1 | ||||
| + Provision For/(Benefit From) Income Taxes | 3.3 | (8.3 | ) | |||
| + Total Interest Expense | 1.5 | 1.7 | ||||
| Total Adjustments | 13.3 | 1.5 | ||||
| EBITDA EBITDA per Diluted Share |
$ $ |
17.3 $0.36 |
$ $ |
(20.0 (0.53 |
) ) |
|
| Additional Adjustments: | ||||||
| + Acquisition-related costs (transaction & integration) | 2.3 | 1.1 | ||||
| + Impact of purchase accounting on inventory step-up | - | 0.1 | ||||
| Total Additional Adjustments | 2.3 | 1.2 | ||||
| Adjusted EBITDA Adjusted EBITDA per Diluted Share |
$ $ |
19.6 0.40 |
$ $ |
(18.8 (0.50 |
) ) |
|
CONFERENCE CALL AND WEBCAST INFORMATION
Company management will host a conference call at
| Live Teleconference Information: Dial in number: (855) 766-6521 International dial in: (262) 912-6157 Passcode: 97119974 |
Live Webcast Information: Visit www.emergentbiosolutions.com and select the “Investors” section |
Pre-registering for the live call will expedite access and minimize hold times. You will be issued a passcode to bypass the operator and connect directly. To pre-register for the call, visit the following website: http://edge.media-server.com/m/p/g3gezmnx/lan/en.
A replay of the call can be accessed on Emergent’s website www.emergentbiosolutions.com under the “Investors” section.
ABOUT
SAFE HARBOR STATEMENT
This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements, other than statements of historical fact, including, without limitation, our financial guidance, and any other statements containing the words "believes", "expects", "anticipates", "intends", "plans", "forecasts", "estimates" and similar expressions in conjunction with, among other things, the planned spin-off of Aptevo Therapeutics, discussions of financial performance or financial condition, growth strategy, product sales, manufacturing capabilities, product development, regulatory approvals or expenditures are forward-looking statements. These forward-looking statements are based on our current intentions, beliefs and expectations regarding future events. We cannot guarantee that any forward-looking statement will be accurate. Investors should realize that if underlying assumptions prove inaccurate or unknown risks or uncertainties materialize, actual results could differ materially from our expectations. Investors are, therefore, cautioned not to place undue reliance on any forward-looking statement. Any forward-looking statement speaks only as of the date of this press release, and, except as required by law, we do not undertake to update any forward-looking statement to reflect new information, events or circumstances.
There are a number of important factors that could cause the Company's actual results to differ materially from those indicated by such forward-looking statements, including whether the planned spin-off of Aptevo is completed, as expected or at all, and the timing of any such spin-off; whether the conditions to the spin-off can be satisfied; whether the operational, marketing and strategic benefits of the spin-off can be achieved; whether the costs and expenses of the spin-off can be controlled within expectations; appropriations for BioThrax procurement; our ability to obtain a follow-on BioThrax procurement contract with the CDC and new BioThrax sales contracts or modifications to existing contracts; our plans to pursue label expansions and improvements for BioThrax; availability of funding for our US government grants and contracts; our ability to identify and acquire or in-license products or late-stage product candidates that satisfy our selection criteria; whether anticipated synergies and benefits from an acquisition or in-license are realized within expected time periods or at all; our ability to enter into and maintain selective collaboration arrangements; the timing of and our ability to achieve milestones in out-license and collaboration contracts; our ability to achieve
FINANCIAL STATEMENTS FOLLOW
| Emergent BioSolutions Inc. and Subsidiaries | ||||||||
| Consolidated Balance Sheets | ||||||||
| (in thousands, except share and per share data) | ||||||||
| March 31, 2016 | December 31, 2015 | |||||||
| ASSETS | (Unaudited) | |||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 341,016 | $ | 312,795 | ||||
| Accounts receivable, net | 69,560 | 120,767 | ||||||
| Inventories | 88,200 | 76,936 | ||||||
| Income tax receivable, net | 3,771 | 6,573 | ||||||
| Prepaid expenses and other current assets | 25,613 | 20,339 | ||||||
| Total current assets | 528,160 | 537,410 | ||||||
| Property, plant and equipment, net | 342,083 | 331,856 | ||||||
| In-process research and development | 42,501 | 42,501 | ||||||
| Intangible assets, net | 55,010 | 57,375 | ||||||
| Goodwill | 54,902 | 54,902 | ||||||
| Deferred tax assets, net | 11,124 | 11,286 | ||||||
| Other assets | 2,117 | 2,154 | ||||||
| Total assets | $ | 1,035,897 | $ | 1,037,484 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 45,611 | $ | 45,966 | ||||
| Accrued expenses and other current liabilities | 4,187 | 6,229 | ||||||
| Accrued compensation | 26,528 | 34,683 | ||||||
| Contingent consideration, current portion | 2,580 | 2,553 | ||||||
| Provisions for chargebacks | 1,960 | 2,238 | ||||||
| Deferred revenue, current portion | 9,589 | 7,942 | ||||||
| Total current liabilities | 90,455 | 99,611 | ||||||
| Contingent consideration, net of current portion | 23,114 | 23,046 | ||||||
| Long-term indebtedness | 247,192 | 246,892 | ||||||
| Deferred revenue, net of current portion | 6,817 | 6,590 | ||||||
| Other liabilities | 1,337 | 1,328 | ||||||
| Total liabilities | 368,915 | 377,467 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, $0.001 par value; 15,000,000 shares authorized, 0 shares issued and outstanding at both March 31, 2016 and December 31, 2015 |
- | - | ||||||
| Common stock, $0.001 par value; 100,000,000 shares authorized, 40,257,241 shares issued and 39,834,411 shares outstanding at March 31, 2016; 39,829,408 shares issued and 39,406,578 shares outstanding at December 31, 2015 |
40 | 40 | ||||||
| Treasury stock, at cost, 422,830 common shares | (6,420 | ) | (6,420 | ) | ||||
| Additional paid-in capital | 322,384 | 317,971 | ||||||
| Accumulated other comprehensive loss | (4,152 | ) | (2,713 | ) | ||||
| Retained earnings | 355,130 | 351,139 | ||||||
| Total stockholders’ equity | 666,982 | 660,017 | ||||||
| Total liabilities and stockholders’ equity | $ | 1,035,897 | $ | 1,037,484 | ||||
| Emergent BioSolutions Inc. and Subsidiaries | ||||||||
| Consolidated Statements of Operations | ||||||||
| (in thousands, except share and per share data) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2016 | 2015 | |||||||
| (Unaudited) | ||||||||
| Revenues: | ||||||||
| Product sales | $ | 71,706 | $ | 18,291 | ||||
| Contract manufacturing | 7,587 | 12,243 | ||||||
| Contracts, grants and collaborations | 31,709 | 33,099 | ||||||
| Total revenues | 111,002 | 63,633 | ||||||
| Operating expense: | ||||||||
| Cost of product sales and contract manufacturing | 28,503 | 18,748 | ||||||
| Research and development | 34,154 | 38,702 | ||||||
| Selling, general and administrative | 39,784 | 34,493 | ||||||
| Income (loss) from operations | 8,561 | (28,310 | ) | |||||
| Other income (expense): | ||||||||
| Interest income | 186 | 82 | ||||||
| Interest expense | (1,524 | ) | (1,661 | ) | ||||
| Other income, net | 116 | 100 | ||||||
| Total other expense, net | (1,222 | ) | (1,479 | ) | ||||
| Income (loss) before provision for (benefit from) income taxes | 7,339 | (29,789 | ) | |||||
| Provision for (benefit from) income taxes | 3,348 | (8,269 | ) | |||||
| Net income (loss) | $ | 3,991 | $ | (21,520 | ) | |||
| Net income (loss) per share - basic | $ | 0.10 | $ | (0.57 | ) | |||
| Net income (loss) per share - diluted | $ | 0.10 | $ | (0.57 | ) | |||
| Weighted-average number of shares - basic | 39,542,656 | 37,949,358 | ||||||
| Weighted-average number of shares - diluted | 48,359,892 | 37,949,358 | ||||||
| Emergent BioSolutions Inc. and Subsidiaries | ||||||||
| Consolidated Statements of Cash Flows | ||||||||
| (in thousands) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2016 | 2015 | |||||||
| Cash flows from operating activities: | (Unaudited) | |||||||
| Net income (loss) | $ | 3,991 | $ | (21,520 | ) | |||
| Adjustments to reconcile to net cash provided by (used in) operating activities: | ||||||||
| Stock-based compensation expense | 5,197 | 3,798 | ||||||
| Depreciation and amortization | 8,840 | 8,532 | ||||||
| Income taxes | 2,964 | (7,261 | ) | |||||
| Change in fair value of contingent consideration | 847 | 1,559 | ||||||
| Excess tax benefits from stock-based compensation | (5,786 | ) | (5,414 | ) | ||||
| Other | 71 | 17 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 51,207 | (5,225 | ) | |||||
| Inventories | (11,264 | ) | (16,460 | ) | ||||
| Income taxes | (4,376 | ) | (12,160 | ) | ||||
| Prepaid expenses and other assets | (5,555 | ) | (249 | ) | ||||
| Accounts payable | 385 | 1,102 | ||||||
| Accrued expenses and other liabilities | (2,045 | ) | (1,641 | ) | ||||
| Accrued compensation | (8,277 | ) | (10,883 | ) | ||||
| Provision for chargebacks | (278 | ) | (82 | ) | ||||
| Deferred revenue | 1,874 | 14 | ||||||
| Net cash provided by (used in) operating activities | 37, 795 | (65,873 | ) | |||||
| Cash flows from investing activities: | ||||||||
| Purchases of property, plant and equipment | (18,214 | ) | (9,082 | ) | ||||
| Net cash used in investing activities | (18,214 | ) | (9,082 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Issuance of common stock upon exercise of stock options | 3,595 | 6,344 | ||||||
| Excess tax benefits from stock-based compensation | 5,786 | 5,414 | ||||||
| Contingent obligation payments | (752 | ) | (762 | ) | ||||
| Net cash provided by financing activities | 8,629 | 10,996 | ||||||
| Effect of exchange rate changes on cash and cash equivalents | 11 | (25 | ) | |||||
| Net increase (decrease) in cash and cash equivalents | 28,221 | (63,984 | ) | |||||
| Cash and cash equivalents at beginning of period | 312,795 | 280,499 | ||||||
| Cash and cash equivalents at end of period | $ | 341,016 | $ | 216,515 | ||||
Investor ContactRobert Burrows Vice President, Investor Relations (o) 240/631-3280; (m) 240/413-1917 BurrowsR@ebsi.com Media ContactTracey Schmitt Lintott Senior Vice President, Global Public Affairs (o) 240/631-3394 SchmittT@ebsi.com