Emergent BioSolutions Reports Fourth Quarter and Twelve Months 2017 Financial Results
- Reaffirms full year 2018 forecast and 2020 goals
- Revises 1Q 2018 forecast
2017 FINANCIAL HIGHLIGHTS
(in millions) |
4Q 2017 (unaudited) |
4Q 2016 (1) (unaudited) |
||
| Total Revenues | $ | 193.8 | $ | 151.7 |
| Net Income | $ | 33.9 | $ | 32.3 |
| Adjusted Net Income (2) | $ | 37.8 | $ | 36.6 |
| EBITDA (1) | $ | 65.2 | $ | 61.3 |
(in millions) |
Full Year 2017 (unaudited) |
Full Year 2016 (1) | ||
| Total Revenues | $ | 560.9 | $ | 488.8 |
| Net Income | $ | 82.6 | $ | 62.5 |
| Adjusted Net Income (2) | $ | 95.7 | $ | 77.5 |
| EBITDA (1) | $ | 166.0 | $ | 141.7 |
(1) Financial results for 4Q 2016 and Full Year 2016 are presented on a continuing operations basis.
(2) See “Reconciliation of Net Income to Adjusted Net Income and EBITDA” for a definition of terms and a reconciliation table.
4Q 2017 BUSINESS ACCOMPLISHMENTS
Acquisitions
- Completed the acquisition of Sanofi’s ACAM2000® business, including ACAM2000 (Smallpox (Vaccinia) Vaccine, Live), the only smallpox vaccine licensed by the
U.S. Food and Drug Administration (FDA ), related manufacturing facilities and employees, and an existing 10-year,$425 million contract with theCenters for Disease Control and Prevention (CDC) with a remaining value at acquisition of up to approximately$160 million for deliveries of ACAM2000 to the Strategic National Stockpile (SNS) - Completed the acquisition of Raxibacumab, an
FDA -approved anthrax monoclonal antibody, from GSK and assumed responsibility for a multi-year contract with theBiomedical Advanced Research and Development Authority (BARDA), with a remaining value at acquisition of up to approximately$130 million , to supply Raxibacumab to the SNS
Procurement Contracts
- Awarded a contract valued at up to approximately
$25 million by theU.S. Department of State to supply Trobigard™(3) (Atropine Sulfate [2mg]/Obidoxime Chloride [220mg]) auto-injector, a drug and device combination product for emergency use outside of the U.S. in the event of nerve agent or organophosphate poisoning - Awarded a contract by the
Department of National Defence , valued at approximately$8 million , to deliver Anthrasil® (Anthrax Immune Globulin Intravenous [human]) to the Canadian government
Capital Structure
- Converted approximately
$239.4 million , or 95.8%, of the$250 million 2.875% Convertible Senior Notes due 2021 (the Notes) for approximately 8.5 million shares of the company’s common stock by holders of the Notes. - Repurchased 788,894 shares of its common stock in the fourth quarter of 2017 under a board-approved share repurchase program
(3) Trobigard is not currently approved or cleared by the
2017 FINANCIAL PERFORMANCE
(I) Quarter Ended
Revenues
Total Revenues
For Q4 2017, total revenues were
Product Sales
For Q4 2017, product sales were
(in millions) (unaudited) |
Three Months Ended December 31, |
|||||
| 2017 | 2016 | % Change | ||||
| Product Sales | ||||||
| BioThrax® | $ | 107.0 | $ | 43.8 | 145 | % |
| Other | 54.6 | 43.7 | 25 | % | ||
| Total Product Sales | $ | 161.6 | $ | 87.5 | 85 | % |
Contract Manufacturing
For Q4 2017, revenue from the Company’s contract manufacturing operations was
Contracts and Grants
For Q4 2017, contracts and grants revenue was
Operating Expenses
Cost of Product Sales and Contract Manufacturing
For Q4 2017, cost of product sales and contract manufacturing was
Research and Development (Gross and Net)
For Q4 2017, gross R&D expenses were
For Q4 2017, net R&D expense (calculated as gross research and development expenses less contracts and grants revenue) was
| (in millions) (unaudited) |
Three Months Ended December 31, |
||||||
| 2017 | 2016 | % Change | |||||
| Research and Development Expenses | $ | 28.5 | $ | 27.1 | 5 | % | |
| Adjustments: | |||||||
| - Contracts and grants revenue | $ | 15.9 | $ | 47.5 | (66 | %) | |
| Net Research and Development Expenses (Income) | $ | 12.6 | $ | (20.4 | ) | -- | |
Selling, General and Administrative
For Q4 2017, selling, general and administrative expenses were
Net Income & Adjusted Net Income
For Q4 2017, net income was
Net income per diluted share is computed using the “if-converted” method prior to
| (in millions, except per share value) (unaudited) |
Three Months Ended December 31, |
|||
| 2017 | 2016 | |||
| Net Income | $ | 33.9 | $ | 32.3 |
| Adjustments: | ||||
| + Interest expense, net of tax | 0.2 | 0.9 | ||
| + Amortization of debt issuance costs, net of tax | 0.1 | 0.2 | ||
| Net Income, adjusted (“if converted”) | $ | 34.2 | $ | 33.4 |
| Net Income Per Diluted Share, adjusted (“if converted”) | $ | 0.67 | $ | 0.67 |
| Weighted Average Diluted Shares | 51.0 | 49.6 | ||
For Q4 2017, adjusted net income, a non-GAAP measure, was
(II) Year Ended
Revenues
Total Revenues
For the twelve months of 2017, total revenues were
Product Sales
For the twelve months of 2017, product sales were
(in millions) |
Twelve Months Ended December 31, |
|||||
| 2017 (unaudited) |
2016 | % Change | ||||
| Product Sales | ||||||
| BioThrax® | $ | 286.6 | $ | 237.0 | 21 | % |
| Other | $ | 134.9 | $ | 59.3 | 128 | % |
| Total Product Sales | $ | 421.5 | $ | 296.3 | 42 | % |
Contract Manufacturing
For the twelve months of 2017, revenue from the Company’s contract manufacturing operations was
Contracts and Grants
For the twelve months of 2017, contracts and grants revenue was
Operating Expenses
Cost of Product Sales and Contract Manufacturing
For the twelve months of 2017, cost of product sales and contract manufacturing was
Research and Development (Gross and Net)
For the twelve months of 2017, gross R&D expenses were
For the twelve months of 2017, net R&D expense (calculated as gross research and development expenses less contracts and grants revenue) was
| (in millions) | Twelve Months Ended December 31, |
||||||
| 2017 (unaudited) |
2016 | % Change | |||||
| Research and Development Expenses | $ | 97.4 | $ | 108.3 | (10 | %) | |
| Adjustments: | |||||||
| - Contracts and grants revenue | $ | 70.4 | $ | 143.4 | (51 | %) | |
| Net Research and Development Expenses (Income) | $ | 27.0 | $ | (35.1 | ) | -- | |
Selling, General and Administrative
For the twelve months of 2017, selling, general and administrative expenses were
Net Income & Adjusted Net Income
For the twelve months of 2017, net income was
Net income per diluted share is computed using the “if-converted” method prior to
| (in millions, except per share value) | Twelve Months Ended December 31, |
|||
| 2017 (unaudited) |
2016 | |||
| Net Income | $ | 82.6 | $ | 62.5 |
| Adjustments: | ||||
| + Interest expense, net of tax | 2.6 | 3.3 | ||
| + Amortization of debt issuance costs, net of tax | 0.7 | 0.8 | ||
| Net Income, adjusted (“if converted”) | $ | 85.9 | $ | 66.6 |
| Net Income Per Diluted Share, adjusted (“if converted”) | $ | 1.71 | $ | 1.35 |
| Weighted Average Diluted Shares | 50.3 | 49.3 | ||
For the twelve months of 2017, adjusted net income, a non-GAAP measure, was
2018 FINANCIAL & OPERATIONAL GOALS
2018 Financial Forecast:
- Total revenue of
$715 to $755 million - Pre-Tax income of
$120 to $140 million - Net income of
$95 to $110 million - Adjusted net income of
$110 to $125 million (2) - EBITDA of
$175 to $190 million (2)
(2) See “Reconciliation of Net Income to Adjusted Net Income and EBITDA” for a definition of terms and a reconciliation table.
2018 Operational Goals:
- Advance NuThrax development to enable Emergency Use Authorization filing with the
FDA in 2018 - Complete ACAM2000 deliveries; establish a multi-year follow-on contract with the U.S. government
- Deliver Raxibacumab doses under current contract; advance tech transfer to the company’s CIADM Bayview facility in
Baltimore, Maryland Progress pipeline to have at least four product candidates in advanced development- Complete an acquisition that generates revenue within 12 months of closing
1Q 2018 Financial Forecast (Revised):
- Total revenue of
$125 to $150 million ; previous forecast was$145 to $160 million ; the revision primarily reflects the timing of deliveries of BioThrax
2020 FINANCIAL & OPERATIONAL GOALS
The Company is targeting the following 2020 financial and operational goals:
- Total Revenue:
$1 billion - Revenue Mix: at least 10% of total revenue from ex-US customers
- Expense Discipline: Net R&D <15% of net revenue (4); SG&A <25% of total revenue
- Net Income: at least 14% of total revenue
- Product Development Pipeline: Six products in clinical or advanced development (with at least three dual-market opportunities)
(4) Computed as Total Revenue less Contracts & Grants Revenue.
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 Conference ID: 93325042 |
| Live Webcast Information: Visit edge.media-server.com/m6/p/qhvnyd93 for the live webcast feed. |
A replay of the call can be accessed on Emergent’s website emergentbiosolutions.com under “Investors.”
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, statements regarding the potential opportunities and anticipated financial implications of our acquisitions of the ACAM2000 business from
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 the availability of funding and the exercise of options under our BioThrax and NuThrax contracts; appropriations for the procurement of our products; our ability to secure EUA pre-authorization approval and licensure of NuThrax from the
| Investor Contact Robert Burrows Vice President, Investor Relations (o) 240/631-3280; (m) 240/413-1917 burrowsr@ebsi.com |
Media Contact Lynn Kieffer Vice President, Corporate Communications (o) 240/631-3391 kiefferl@ebsi.com |
FINANCIAL STATEMENTS FOLLOW
| Emergent BioSolutions Inc. and Subsidiaries | ||||||
| Consolidated Statements of Operations | ||||||
| (in thousands, except share and per share data) | ||||||
| Three Months Ended December 31, | ||||||
| 2017 | 2016 | |||||
| (Unaudited) | ||||||
| Revenues: | ||||||
| Product sales | $ | 161,641 | $ | 87,493 | ||
| Contract manufacturing | 16,235 | 16,683 | ||||
| Contracts and grants | 15,933 | 47,487 | ||||
| Total revenues | 193,809 | 151,663 | ||||
| Operating expenses: | ||||||
| Cost of product sales and contract manufacturing | 70,258 | 38,259 | ||||
| Research and development | 28,498 | 27,117 | ||||
| Selling, general and administrative | 41,976 | 35,358 | ||||
| Income from operations | 53,077 | 50,929 | ||||
| Other income (expense): | ||||||
| Interest income | 160 | 289 | ||||
| Interest expense | (856 | ) | (2,535 | ) | ||
| Other income (expense), net | (428 | ) | 439 | |||
| Total other expense, net | (1,124 | ) | (1,807 | ) | ||
| Income before provision for income taxes | 51,953 | 49,122 | ||||
| Provision for income taxes | 18,011 | 16,836 | ||||
| Net income | $ | 33,942 | $ | 32,286 | ||
| Net income per share - basic | $ | 0.77 | $ | 0.80 | ||
| Net income per share – diluted (5) | $ | 0.67 | $ | 0.67 | ||
| Weighted-average number of shares - basic | 44,269,276 | 40,519,002 | ||||
| Weighted-average number of shares - diluted | 51,004,378 | 49,572,655 | ||||
(5) See “Net Income and Adjusted Net Income” within section “(I) Quarter Ended
| Emergent BioSolutions Inc. and Subsidiaries | ||||||
| Consolidated Statements of Operations | ||||||
| (in thousands, except share and per share data) | ||||||
| Twelve Months Ended December 31, | ||||||
| 2017 | 2016 | |||||
| (Unaudited) | ||||||
| Revenues: | ||||||
| Product sales | $ | 421,516 | $ | 296,278 | ||
| Contract manufacturing | 68,935 | 49,138 | ||||
| Contracts and grants | 70,422 | 143,366 | ||||
| Total revenues | 560,873 | 488,782 | ||||
| Operating expenses: | ||||||
| Cost of product sales and contract manufacturing | 195,707 | 131,284 | ||||
| Research and development | 97,384 | 108,290 | ||||
| Selling, general and administrative | 143,497 | 143,686 | ||||
| Income from operations | 124,285 | 105,522 | ||||
| Other income (expense): | ||||||
| Interest income | 1,753 | 1,053 | ||||
| Interest expense | (6,590 | ) | (7,617 | ) | ||
| Other income (expense), net | (815 | ) | 263 | |||
| Total other expense, net | (5,652 | ) | (6,301 | ) | ||
| Income from continuing operations before provision for income taxes | 118,633 | 99,221 | ||||
| Provision for income taxes | 36,039 | 36,697 | ||||
| Net income from continuing operations | 82,594 | 62,524 | ||||
| Net loss from discontinued operations | - | (10,748 | ) | |||
| Net income | $ | 82,594 | $ | 51,776 | ||
| Net income per share from continuing operations - basic | $ | 1.98 | $ | 1.56 | ||
| Net loss per share from discontinued operations - basic | - | (0.27 | ) | |||
| Net income per share - basic | $ | 1.98 | $ | 1.29 | ||
| Net income per share from continuing operations - diluted | $ | 1.71 | $ | 1.35 | ||
| Net loss per share from discontinued operations - diluted | - | (0.22 | ) | |||
| Net income per share - diluted (5) | $ | 1.71 | $ | 1.13 | ||
| Weighted-average number of shares - basic | 41,816,431 | 40,184,159 | ||||
| Weighted-average number of shares - diluted | 50,327,937 | 49,335,112 | ||||
(5) See “Net Income and Adjusted Net Income” within section “(II) Year Ended
| Emergent BioSolutions Inc. and Subsidiaries | ||||||
| Consolidated Balance Sheets | ||||||
| (in thousands, except share and per share data) | ||||||
| December 31, 2017 | December 31, 2016 | |||||
| ASSETS | (Unaudited) | |||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 178,292 | $ | 271,513 | ||
| Restricted cash | 1,043 | - | ||||
| Accounts receivable, net | 143,653 | 138,478 | ||||
| Inventories | 142,812 | 74,002 | ||||
| Income tax receivable, net | 2,432 | 9,996 | ||||
| Prepaid expenses and other current assets | 17,157 | 16,229 | ||||
| Total current assets | 485,389 | 510,218 | ||||
| Property, plant and equipment, net | 407,210 | 376,448 | ||||
| Intangible assets, net | 119,597 | 33,865 | ||||
| Goodwill | 49,130 | 41,001 | ||||
| Deferred tax assets, long-term, net | 2,834 | 6,096 | ||||
| Other assets | 6,046 | 2,483 | ||||
| Total assets | $ | 1,070,206 | $ | 970,111 | ||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 41,751 | $ | 34,649 | ||
| Accrued expenses and other current liabilities | 4,831 | 6,368 | ||||
| Accrued compensation | 37,882 | 34,537 | ||||
| Notes payable | - | 20,000 | ||||
| Contingent consideration, current portion | 2,372 | 3,266 | ||||
| Deferred revenue, current portion | 13,232 | 7,036 | ||||
| Total current liabilities | 100,068 | 105,856 | ||||
| Contingent consideration, net of current portion | 9,902 | 9,919 | ||||
| Long-term indebtedness | 13,457 | 248,094 | ||||
| Income taxes payable, net of current | 12,500 | - | ||||
| Deferred revenue, net of current portion | 17,259 | 8,433 | ||||
| Other liabilities | 4,675 | 1,604 | ||||
| Total liabilities | 157,861 | 373,906 | ||||
| Stockholders’ equity: | ||||||
| Preferred stock, $0.001 par value; 15,000,000 shares authorized, 0 shares issued and outstanding at both December 31, 2017 and December 31, 2016 |
- | - | ||||
| Common stock, $0.001 par value; 200,000,000 shares authorized, 50,619,808 shares issued and 49,405,365 shares outstanding at December 31, 2017; 40,996,890 shares issued and 40,574,060 shares outstanding at December 31, 2016 |
50 | 41 | ||||
| Treasury stock, at cost, 1,214,443 and 422,830 common shares at December 31, 2017 and December 31, 2016, respectively |
(39,497 | ) | (6,420 | ) | ||
| Additional paid-in capital | 618,416 | 352,435 | ||||
| Accumulated other comprehensive loss | (3,698 | ) | (4,331 | ) | ||
| Retained earnings | 337,074 | 254,480 | ||||
| Total stockholders’ equity | 912,345 | 596,205 | ||||
| Total liabilities and stockholders’ equity | $ | 1,070,206 | $ | 970,111 | ||
RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME AND EBITDA
This press release contains two financial measures (Adjusted Net Income and EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization)) 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 Net Income to Adjusted Net Income (Unaudited)
| (in millions, except per share value) | Three Months Ended December 31, |
||||||
| 2017 | 2016 | Source | |||||
| Net Income | $ | 33.9 | $ | 32.3 | N/A | ||
| Adjustments: | |||||||
| + Acquisition-related costs (transaction & integration) | 1.5 | 1.0 | SG&A | ||||
| + Non-cash amortization charges | 4.1 | 1.9 | COGS, SG&A, Other Income | ||||
| + Exit and disposal costs | -- | 2.6 | SG&A | ||||
| + Impact of purchase accounting on inventory step-up | 0.4 | 1.1 | SG&A | ||||
| Tax effect | (2.1 | ) | (2.3 | ) | N/A | ||
| Total Adjustments: | 3.9 | 4.3 | N/A | ||||
| Adjusted Net Income | $ | 37.8 | $ | 36.6 | N/A | ||
| Adjusted Net Income Per Diluted Share | $ | 0.74 | $ | 0.74 | |||
| (in millions, except per share value) | Twelve Months Ended December 31, |
||||||
| 2017 | 2016 | Source | |||||
| Net Income | $ | 82.6 | $ | 62.5 | N/A | ||
| Adjustments: | |||||||
| + Acquisition-related costs (transaction & integration) | 5.6 | 1.7 | SG&A | ||||
| + Non-cash amortization charges | 10.3 | 8.4 | COGS, SG&A, Other Income | ||||
| + Exit and disposal costs | 1.5 | 11.7 | SG&A | ||||
| + Impact of purchase accounting on inventory step-up | 2.6 | 1.1 | SG&A | ||||
| Tax effect | (7.0 | ) | (8.0 | ) | N/A | ||
| Total Adjustments: | 13.1 | 15.0 | N/A | ||||
| Adjusted Net Income | $ | 95.7 | $ | 77.5 | N/A | ||
| Adjusted Net Income Per Diluted Share | $ | 1.90 | $ | 1.57 | |||
Reconciliation of Net Income to EBITDA (Unaudited)
| (in millions, except per share value) | Three Months Ended December 31, |
|||
| 2017 | 2016 | |||
| Net Income | $ | 33.9 | $ | 32.3 |
| Adjustments: | ||||
| + Depreciation & Amortization | 12.4 | 9.7 | ||
| + Provision for Income Taxes | 18.0 | 16.8 | ||
| + Total Interest Expense | 0.9 | 2.5 | ||
| Total Adjustments | 31.3 | 29.0 | ||
| EBITDA | $ | 65.2 | $ | 61.3 |
| EBITDA per Diluted Share | $ | 1.28 | $ | 1.24 |
| (in millions, except per share value) | Twelve Months Ended December 31, |
|||
| 2017 | 2016 | |||
| Net Income | $ | 82.6 | 62.5 | |
| Adjustments: | ||||
| + Depreciation & Amortization | 40.8 | 34.9 | ||
| + Provision for Income Taxes | 36.0 | 36.7 | ||
| + Total Interest Expense | 6.6 | 7.6 | ||
| Total Adjustments | 83.4 | 79.2 | ||
| EBITDA | $ | 166.0 | $ | 141.7 |
| EBITDA per Diluted Share | $ | 3.30 | $ | 2.87 |
RECONCILIATION OF STATEMENT OF OPERATIONS
The following table provides a reconciliation of the Company’s Statement of Operations for the Twelve Months Ended
| (in millions) | |||||||||
| Twelve Months Ended December 31, 2016 | |||||||||
| Continuing Operations | Discontinuing Operations | Combined | |||||||
| Revenues: | (Unaudited) | ||||||||
| Product sales | $ | 296.3 | $ | 21.2 | $ | 317.5 | |||
| Contract manufacturing | 49.1 | - | 49.1 | ||||||
| Contracts and grants | 143.4 | 0.2 | 143.6 | ||||||
| Total revenues | 488.8 | 21.4 | 510.2 | ||||||
| Operating expenses: | |||||||||
| Cost of product sales and contract manufacturing | 131.3 | 11.6 | 142.9 | ||||||
| Research and development | 108.3 | 18.0 | 126.3 | ||||||
| Selling, general and administrative | 143.7 | 23.8 | 167.5 | ||||||
| Income (loss) from operations | 105.5 | (32.0 | ) | 73.5 | |||||
| Other income (expense): | |||||||||
| Interest income | 1.1 | - | 1.1 | ||||||
| Interest expense | (7.6 | ) | - | (7.6 | ) | ||||
| Other expense, net | 0.2 | (0.0 | ) | 0.2 | |||||
| Total other expense, net | (6.3 | ) | (0.0 | ) | (6.3 | ) | |||
| Income (loss) before provision for (benefit) from income taxes | 99.2 | (32.0 | ) | 67.2 | |||||
| Provision for (benefit from) income taxes | 36.7 | (21.3 | ) | 15.4 | |||||
| Net income (loss) | $ | 62.5 | $ | (10.7 | ) | $ | 51.8 | ||
Source: Emergent Biosolutions, Inc.