ALBANY, N.Y., Aug. 4, 2016 /PRNewswire/ -- AMRI (NASDAQ:
AMRI) today reported financial and operating results for the second
quarter ended June 30, 2016 and
provided an update to its outlook for 2016.
Highlights:
- Contract revenue of $116.5
million, up 37% from the second quarter 2015
- Recurring royalty revenue of $4.4
million
- Reported contract margins of 29%; non-GAAP contract margins of
33%
- Reported net loss of ($21.3)
million; non-GAAP net income of $12.7
million
- Reported diluted EPS $(0.61);
non-GAAP diluted EPS of $0.36
- Adjusted EBITDA of $26.8 million,
up 62% from the second quarter 2015
- Updates 2016 outlook to reflect addition of Euticals
Non-GAAP contract
margins, non-GAAP net income, non-GAAP diluted EPS and adjusted
EBITDA are non-GAAP financial measures. For a discussion of these
measures and reconciliations to U.S. GAAP measures, see "Non-GAAP
Financial Measures" and Tables 1, 2 and 3.
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"Solid execution of our strategy resulted in a successful
quarter with strong revenue driven largely by the contributions of
our acquisitions and strong performances in our commercial
operations," said William S. Marth,
AMRI's president and chief executive officer. Higher margin
businesses such as Whitehouse Labs
and Gadea, as well as strong results in our DDS and Drug Product
businesses significantly enhanced our performance this quarter.
We are confident that our plan will enable us to meet our
outlook for the full year 2016, especially with the addition of
Euticals, which brings us compelling strategic benefits and adds to
our ability to generate meaningful value for our customers and
shareholders longer term."
Second Quarter 2016 Results
Total revenue for the second quarter of 2016 was $120.8 million, an increase of 35%, compared to
total revenue of $89.5 million
reported in the second quarter of 2015.
Total contract revenue for the second quarter of 2016 was
$116.5 million, an increase of 37%,
compared to $85.2 million reported in
the second quarter of 2015. Contract margins were 29% in the second
quarter of 2016, compared with 24% for the second quarter of 2015.
Non-GAAP contract margins were 33% for the second quarter of 2016,
compared with 26% for the second quarter of 2015. The improvement
in contract margins was driven largely by the addition of Gadea
Pharmaceuticals.
Recurring royalty revenue in the second quarter of 2016 was
$4.4 million, consistent with the
second quarter of 2015, and reflects an increase in net sales of
amphetamine salts as reported by Allergan, offset by the
elimination of royalties on Allegra (fexofenadine) products which
ended in the second quarter 2015. Recurring royalty revenue for the
second quarter of 2016 includes $3.8
million from the net sales of certain amphetamine salts sold
by Allergan and royalties from an API sourced from our business in
Spain.
Research and development expense in the second quarter of 2016
was $3.5 million, up from
$0.4 million in the second quarter
2015, reflecting increased investment in collaboration agreements
and our API portfolio, and the addition of Gadea
Pharmaceuticals.
Net loss under U.S. GAAP was $(21.3)
million, or $(0.61) per basic
and diluted share, in the second quarter of 2016, compared to U.S.
GAAP net income of $2.3 million, or
$0.07 per basic and diluted share in
the second quarter of 2015. Non-GAAP net income in the second
quarter of 2016 was $12.7 million or
non-GAAP earnings per diluted share of $0.36, compared to non-GAAP net income of
$7.4 million or non-GAAP earnings per
diluted share of $0.22 for the second
quarter of 2015.
Adjusted EBITDA in the second quarter of 2016 was $26.8 million, an increase of $10.3 million or 62% compared to the second
quarter 2015.
For a reconciliation of non-GAAP financial measures to U.S. GAAP
financial measures for the 2016 and 2015 reporting periods, please
see Tables 1, 2 and 3 at the end of this press release.
Year-to-Date Results
Total revenue for the six-month period ended June 30, 2016 was $226.4
million, an increase of 32% compared to total revenue of
$171.4 million reported for the
six-month period ended 2015.
Contract revenue for the six-month period ended June 30, 2016 was $219.3
million, an increase of 37% compared to $160.4 million reported for the six-month period
ended June 30, 2015. Contract margins
reported under GAAP were 26% for the six-month period ended
June 30, 2016, compared with 23% for
the six-month period ended June 30,
2015. Non-GAAP contract margins were 30% for the six-month
period ended June 30, 2016, compared
with 25% for the six-month period ended June
30, 2015.
Recurring royalty revenue for the six-month period ended
June 30, 2016 was $7.1 million, a decrease of 36% from $11.0 million for the six-month period ended
June 30, 2015 due to the expiration
of Allegra (fexofenadine) royalties in the second quarter of 2015.
Recurring royalty revenue for the six-month period ended
June 30, 2016 includes $6.0 million from the net sales of certain
amphetamine salts sold by Allergan and royalties from an API
sourced from our business in Spain.
Research and development expense for the six month period ended
June 30, 2016 was $6.6 million, up from $0.9
million for the six-month period ended June 30, 2015, due to increased investment in
collaboration agreements and our API portfolio, and the addition of
Gadea.
Net loss under U.S. GAAP was $(31.3)
million, or $(0.90) per basic
and diluted share for the six-month period ended June 30, 2016, compared to U.S. GAAP net income
of $0.1 million, or $0.00 per basic and diluted share for the
six-month period ended June 30, 2015.
Non-GAAP net income for the six-month period ended June 30, 2016 was $15.0
million or non-GAAP earnings per diluted share of
$0.42, compared to non-GAAP net
income of $13.8 million or non-GAAP
earnings per diluted share of $0.42
for the six-month period ended June 30,
2015.
Adjusted EBITDA for the six-month period ended June 30, 2016 was $39.8
million, an increase of $7.8
million or 24% compared to the six-month period ended
June 30, 2015.
Segment Results
Active
Pharmaceutical Ingredients (API)
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Three Months
Ended
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Six Months
Ended
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June
30,
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June
30,
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(Unaudited; $ in
thousands)
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2016
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2015
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2016
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2015
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API Contract
Revenue
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65,447
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39,997
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120,149
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77,845
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API Royalty
Revenue
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4,353
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2,535
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7,094
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5,403
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API Total Revenue
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$
69,800
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$
42,532
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$
127,243
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$
83,248
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Cost of Contract
Revenue
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46,279
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28,434
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87,200
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57,017
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Gross Profit,
excluding royalties
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19,168
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11,563
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32,949
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20,828
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Gross Profit,
including royalties
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23,521
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14,098
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40,043
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26,231
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Gross Margin,
excluding royalties
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29.3%
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28.9%
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27.4%
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26.8%
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Gross Margin,
including royalties
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33.7%
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33.1%
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31.5%
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31.5%
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Non-GAAP Gross
Profit, excluding royalties (1)
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22,719
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11,776
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39,963
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21,218
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Non-GAAP Gross
Margin, excluding royalties (1)
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34.7%
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29.4%
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33.3%
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27.3%
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Non-GAAP Gross
Profit, including royalties (1)
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27,072
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14,311
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47,057
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26,621
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Non-GAAP Gross
Margin, including royalties (1)
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38.8%
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33.6%
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37.0%
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32.0%
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(1) Refer to Table 1
included in this release for the reconciliation of U.S. GAAP
contract gross profit and contract gross margin to non-GAAP
contract gross profit and non-GAAP contract gross margin as a
percentage of contract revenue.
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API contract revenue for the second quarter of 2016 increased
64% compared to the second quarter of 2015, primarily due to
$28.1 million of incremental revenue
from the acquisition of Gadea Pharmaceuticals, partially offset by
lower revenue associated with the Holywell, UK site closure. API
contract margin excluding royalties, determined under GAAP for the
second quarter of 2016 was consistent with the second quarter of
2015. API non-GAAP contract margin excluding royalties for the
second quarter of 2016 increased 5 percentage points from 2015,
driven by the margins realized on Gadea Pharmaceutical's
revenues.
API royalty revenue in the second quarter of 2016 increased
$1.8 million over the second quarter
of 2015 and includes $3.8 million
from the net sales of certain amphetamine salts sold by Allergan.
The increase reflects an increase in net sales of amphetamine salts
as reported by Allergan and royalties from an API sourced from our
business in Spain.
For the six-month period ended June 30,
2016, API contract revenue increased $42.3 million or 54%, due primarily to
$48.1 million of incremental revenue
from the acquisition of Gadea Pharmaceuticals, partially offset by
lower revenue associated with the Holywell, UK site closure.
API contract margin excluding royalties determined under GAAP
for the six-month period ended June 30,
2016 was consistent with the six-month period ended
June 30, 2015. API non-GAAP contract
margin excluding royalties for the six-month period ended
June 30, 2016 increased 6 percentage
points compared to the six-month period ended June 30, 2015, driven by the margins realized on
Gadea Pharmaceuticals' revenues.
Drug Discovery
Services (DDS)
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Three Months
Ended
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Six Months
Ended
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June
30,
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June
30,
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(Unaudited; $ in
thousands)
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2016
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2015
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2016
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2015
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DDS Contract Revenue
(1)
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$ 25,820
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$ 21,399
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$ 49,023
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$ 39,273
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Cost of Contract
Revenue (1)
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18,363
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16,003
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35,533
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29,708
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Contract Gross
Profit
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7,457
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5,396
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13,490
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9,565
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Contract Gross
Margin
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28.9%
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25.2%
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27.5%
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24.4%
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Non-GAAP Contract
Gross Profit (2)
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8,042
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5,964
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14,590
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10,289
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Non-GAAP Contract
Gross Margin (2)
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31.1%
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27.9%
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29.8%
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26.2%
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(1) A portion of the
2015 amounts were reclassified from DDS to DPM to better align
business activities within our reporting segments.
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(2) Refer to Table 1
included in this release for the reconciliation of U.S. GAAP
contract gross profit and contract gross margin to non-GAAP
contract gross profit and non-GAAP contract gross margin as a
percentage of contract revenue.
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Discovery and Development Services ("DDS") contract revenue for
the second quarter of 2016 increased 21% compared to the second
quarter of 2015, primarily due to $3.1
million of incremental revenue from the acquisition of
Whitehouse Laboratories and organic growth, partially offset by
lower revenue associated with our Singapore operations.
DDS contract margin determined under GAAP increased 4 percentage
points in the second quarter of 2016 as compared to the second
quarter of 2015. DDS non-GAAP contract margin increased 3
percentage points for the second quarter of 2016 as compared to the
second quarter of 2015, driven by the margins realized on
Whitehouse Laboratories' revenue.
For the first half of 2016, DDS contract revenue increased
$9.8 million or 25%, due primarily to
$5.8 million of incremental revenue
from the acquisition of Whitehouse Laboratories and strong organic
growth, partially offset by lower revenue associated with our
Singapore operations.
DDS contract margin determined under GAAP for the six-month
period ended June 30, 2016 increased
3 percentage points compared with the six-month period ended
June 30, 2015. DDS non-GAAP contract
margin for the six-month period ended June
30, 2016 increased 4 percentage points from the six-month
period ended June 30, 2015, driven by
the margins realized on Whitehouse Laboratories' revenues.
Drug Product
Manufacturing (DPM)
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Three Months
Ended
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Six Months
Ended
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June
30,
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June
30,
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(Unaudited; $ in
thousands)
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2016
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2015
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2016
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2015
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DPM Contract Revenue
(1)
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$
25,190
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$
23,830
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$
50,123
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$
43,240
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Cost of Contract
Revenue (1)
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17,572
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20,231
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38,844
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36,082
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Contract Gross
Profit
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7,618
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3,599
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11,279
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7,158
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Contract Gross
Margin
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30.2%
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15.1%
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22.5%
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16.6%
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Non-GAAP Contract
Gross Profit (2)
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7,864
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4,253
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11,836
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7,983
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Non-GAAP Contract
Gross Margin (2)
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31.2%
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17.8%
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23.6%
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18.5%
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(1) A portion of the
2015 amounts were reclassified from DDS to DPM to better align
business activities within our reporting segments.
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(2) Refer to Table 1
included in this release for the reconciliation of U.S. GAAP
contract gross profit and contract gross margin to non-GAAP
contract gross profit and non-GAAP contract gross margin as a
percentage of contract revenue.
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DPM contract revenue determined under GAAP for the second
quarter of 2016 increased 6% compared to the second quarter 2015,
due to strong demand at our development and commercial
manufacturing facilities, and $2.5
million of contract termination revenue related to the early
termination of one of our collaboration arrangements.
DPM contract margin for the second quarter 2016 increased 15
percentage points compared to the second quarter of 2015. DPM
non-GAAP contract margin for the second quarter of 2016 increased
13 percentage points compared to the second quarter of 2015, due to
$2.5 million of contract termination
revenue and enhanced operational efficiencies at our Albuquerque
manufacturing facility.
DPM contract revenue for the six-month period ended June 30, 2016 increased 16% compared to the
six-month period ended June 30, 2015,
due primarily to $2.5 million of
contract termination revenue.
DPM contract margin determined under GAAP for the six-month
period ended June 30, 2016 increased
6 percentage points compared to the six-month period ended
June 30, 2015. Drug Product
Manufacturing non-GAAP contract margin for the six-month period
ended June 30, 2016 increased 5
percentage points compared to the six-month period ended
June 30, 2015, driven by contract
termination revenue.
Liquidity and Capital Resources
At June 30, 2016, AMRI had cash,
cash equivalents and restricted cash of $31.4 million, compared to $47.2 million at March 31,
2016. The decrease in cash and cash equivalents for the
quarter ended June 30, 2016 was
primarily due to the use of $13.3
million for capital expenditures and $5 million of debt paydown, partially offset by
cash generated by operating activities of $3.5 million. At December
31, 2015, AMRI had cash, cash equivalents and restricted
cash of $52.3 million. The decrease
in cash and cash equivalents for the six months ended June 30, 2016 was primarily due to the use of
$25 million for capital expenditures
and $10.8 million of debt paydown,
partially offset by cash generated by operating activities of
$15.2 million.
Financial Outlook
AMRI's guidance takes into account a number of factors,
including expected financial results for 2016, anticipated tax
rates and shares outstanding. The guidance includes the impact from
the acquisition of Prime European Therapeuticals S.p.A.,
("Euticals"), which closed on July 11,
2016.
AMRI's estimates for full year 2016, including the addition of
Euticals, are as follows:
- Full Year 2016 revenue of $590 to $615
million, reflecting approximately $123 million of incremental revenue from
Euticals, an increase of 50% at the midpoint, including:
- DDS revenue growth of 27% to approximately $106 million
- API revenue growth of 76% to approximately $362 million
- DPM revenue growth of 10% to approximately $107 million
- Fine Chemicals revenue of $16
million
- Royalty revenue of $10 to $11
million
- Non-GAAP contract margin of approximately 29%
- Non-GAAP selling, general and administrative expenses of
approximately 14% of revenue
- R&D expense of between $12 and $13
million
- Adjusted EBITDA between $108 and $114
million, an increase of 47% at the midpoint
- Non-GAAP diluted EPS between $1.03 and
$1.11, based on an average fully diluted share count of
approximately 39 million shares
- Non-GAAP effective tax rate of approximately 30-31%
- Capital expenditures of approximately $48 million
Reflecting the recurring seasonality in AMRI's business and
greater contribution from Euticals in the fourth quarter, the
Company currently expects the percentage of non-GAAP diluted EPS in
the second half of 2016 to be approximately 20% in the third
quarter and 80% in the fourth quarter.
Second Quarter Results Conference Call
AMRI will host a conference call and webcast today
at 8:30 a.m. ET to discuss second quarter 2016
results. The conference call can be accessed by dialing (866)
208-5728 (domestic calls) or (224) 633-1279 (international calls)
at 8:20 a.m. ET and entering passcode
49003667. The webcast and supplementing slides can be accessed on
the company's website at www.amriglobal.com.
A replay of the conference call can be accessed for 24 hours at
(855) 859-2056 (domestic calls) or (404)
537-3406 (international calls) and entering passcode 49003667.
Replays of the webcast can also be accessed for up to 90 days after
the call via the investor area of the company's website at
http://ir.amriglobal.com.
About AMRI
Albany Molecular Research
Inc. (AMRI) is a global contract research and manufacturing
organization that has been working with the Life Sciences industry
to improve patient outcomes and the quality of life for more than
two decades. With locations in North
America, Europe and Asia, our key business segments
include Discovery and Development Services (DDS), Active
Pharmaceutical Ingredients (API), and Drug Product Manufacturing
(DPM). Our DDS segment provides comprehensive services from hit
identification to IND, including expertise with diverse chemistry,
library design and synthesis, in vitro biology and pharmacology,
drug metabolism and pharmacokinetics, as well as natural products.
API supports the chemical development and cGMP manufacture of
complex API, including potent and cytotoxic compounds, controlled
substances, steroids, hormones, and sterile API. DPM supports
development through commercial scale production of complex
liquid-filled and lyophilized parenterals, sterile suspensions and
ophthalmic formulations
Forward-looking Statements
This press release includes forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. These forward-looking statements include all of the estimates
under "Financial Outlook" and statements regarding, among other
things, the planned integration of the Euticals business and the
expected financial impact and synergies, the performance of the
Company's previously acquired higher margin businesses, the
strength of the company's commercial operations and prospects and
the company's momentum and long-term growth. The words "outlook",
"guidance", "anticipates", "believes", "expects", "may", "plans",
"predicts", "will", "potential" and similar expressions are
intended to identify forward-looking statements, although not all
forward-looking statements contain these identifying words. Readers
should not place undue reliance on these forward-looking
statements. The company's actual results may differ materially from
such forward-looking statements as a result of numerous factors,
some of which the Company may not be able to predict and may not be
within the Company's control. Factors that could cause such
differences include, but are not limited to, the ability of the
Company to successfully integrate the Euticals business and achieve
the expected financial results; ongoing headwinds in the U.S.
economy which could lead to overall softness in the markets the
Company serves; difficulty in raising new capital to support the
Company's business and a slowdown in its ability to grow through
acquisitions; trends in pharmaceutical and biotechnology companies'
outsourcing of manufacturing services and chemical research and
development, including softness in these markets; the success of
the sales of the products for which the Company receives royalties;
the risk that the Company will not be able to replicate either in
the short or long term the revenue stream that has historically
been derived from the royalties payable under the Allegra® license
agreements; the risk that clients may terminate or reduce demand
under any strategic or multi-year deal; the Company's ability to
enforce its intellectual property and technology rights; the
Company's ability to access sources of liquidity to provide for its
cash needs, including its debt obligations and capital
expenditures; the Company's ability to successfully comply with
heightened FDA scrutiny on aseptic fill/finish operations; the
results of further FDA inspections; the company's ability to
effectively maintain compliance with applicable FDA and DEA
regulations; the company's ability to integrate past or future
acquisitions, and make such acquisitions accretive to the company's
business model; the company's ability to take advantage of
proprietary technology and expand the scientific tools available to
it, the ability of the company's strategic investments and
acquisitions to perform as expected, as well as those risks
discussed in the company's Annual Report on Form 10-K for the year
ended December 31, 2015 as filed with
the Securities and Exchange Commission on March 30, 2016 and the company's other SEC
filings. The financial guidance offered by senior management with
respect to 2016 represents a point-in-time estimate and is based on
information as of the date of this press release. Senior management
has made numerous assumptions in providing this guidance which,
while believed to be reasonable, may not prove to be accurate.
Numerous factors, including those noted above, may cause actual
results to differ materially from the guidance provided. The
company expressly disclaims any current intention or obligation to
update the guidance provided or any other forward-looking statement
in this press release to reflect future events or changes in facts
assumed for purposes of providing this guidance or otherwise
affecting the forward-looking statements contained in this press
release.
Non-GAAP Financial Measures
To supplement our
financial results prepared in accordance with U.S. GAAP, we have
presented non-GAAP measures of contract gross profit, contract
gross margin, net income, and earnings per diluted share, adjusted
to exclude certain charges (and gains when applicable) that relate
to specific events or transactions, such as impairment charges,
restructuring charges, executive transition costs, business
acquisition costs, realized and unrealized gains and losses on
hedge transactions related to business acquisitions, non-recurring
professional fees, ERP implementation costs, insurance recoveries
on business interruption events, and gains on sales of facilities
in the 2016 and 2015 periods presented. Management typically
excludes these amounts when evaluating our operating performance
and believes that the resulting non-GAAP measures provide investors
with a consistent basis for comparison across periods and,
therefore, are useful to investors in assessing our operating
performance.
Our U.S. GAAP measures are also adjusted to exclude certain
non-cash charges (and gains when applicable) such as non-cash debt
interest and amortization charges, share-based compensation
expense, purchase accounting inventory adjustments, and purchase
accounting depreciation and amortization for the periods presented
for 2016 and 2015. Management typically excludes the amounts
described above when evaluating our operating performance and
believes that the resulting non-GAAP measures are useful to
investors in assessing our operating performance.
We have also presented the non-GAAP measure of adjusted EBITDA,
which in addition to the items excluded above, further excludes the
impact of interest income and expense, depreciation and
amortization expense, and income tax expense or benefit.
We believe presentation of our non-GAAP measures enhances an
overall understanding of our historical financial performance
because we believe they are an indication of the performance of our
base business. Management uses these non-GAAP measures as a basis
for evaluating our financial performance as well as for budgeting
and forecasting of future periods. For these reasons, we believe
they can be useful to investors. The presentation of this
additional information should not be considered in isolation or as
a substitute for net (loss) income or (loss) income per diluted
share, prepared in accordance with U.S. GAAP. Reconciliations of
these non-GAAP measures to the most directly comparable GAAP
financial measures are set forth in Tables 1-3.
A reconciliation of forward-looking non-GAAP financial measures
to the most directly comparable GAAP reported financial measures
has not been included because we are unable to provide such
information without the use of unreasonable efforts. In
particular, sufficient information is not available to predict with
reasonable certainty the expense related to certain purchase
accounting adjustments (inventory, tangible assets and intangible
assets) relating to our recent acquisition of Euticals, which
closed on July 11, 2016, and any
potential restructuring actions that may be initiated as a result
of that acquisition. The disclosure of such reconciliations
may imply to our investors a degree of precision in our
calculations that is not possible. These amounts are uncertain at
this time, depend on a number of factors and could have a material
impact on GAAP reported results for the guidance
period.
Albany Molecular
Research, Inc.
Selected
Consolidated Balance Sheet Data
(unaudited)
|
|
(Dollars in
thousands)
|
|
June
30,
|
December
31,
|
|
|
2016
|
2015
|
|
|
|
|
Cash and cash
equivalents
|
|
$
30,675
|
$
49,343
|
Restricted
cash
|
|
713
|
2,966
|
Accounts receivable,
net
|
|
100,589
|
110,427
|
Royalty income
receivable
|
|
5,992
|
6,184
|
Inventory
|
|
93,174
|
89,231
|
Total current
assets
|
|
256,653
|
280,245
|
Property and
equipment, net
|
|
222,011
|
209,508
|
Total
assets
|
|
806,506
|
865,567
|
|
|
|
|
Total current
liabilities
|
|
102,715
|
99,096
|
Long‑term debt,
excluding current installments, net of unamortized
discount
|
|
370,798
|
373,692
|
Total
liabilities
|
|
543,574
|
578,344
|
Total stockholders'
equity
|
|
262,932
|
287,223
|
Total liabilities and
stockholders' equity
|
|
806,506
|
865,567
|
Albany Molecular
Research, Inc.
Condensed
Consolidated Statements of Operations (unaudited)
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
(Dollars in
thousands, except for per share data)
|
|
|
June 30, 2016
|
|
|
June 30, 2015
|
|
|
June 30, 2016
|
|
June 30, 2015
|
|
|
|
|
|
|
|
|
|
Contract
revenue
|
|
$
|
116,457
|
|
$
|
85,226
|
|
$
|
219,295
|
|
$
|
160,358
|
Recurring
royalties
|
|
|
4,353
|
|
|
4,322
|
|
|
7,094
|
|
|
11,007
|
Total
revenue
|
|
|
120,810
|
|
|
89,548
|
|
|
226,389
|
|
|
171,365
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of contract
revenue
|
|
|
82,214
|
|
|
64,668
|
|
|
161,577
|
|
|
122,807
|
Technology incentive
award
|
|
|
-
|
|
|
179
|
|
|
-
|
|
|
560
|
Research and
development
|
|
|
3,479
|
|
|
384
|
|
|
6,647
|
|
|
875
|
Selling, general and
administrative
|
|
|
27,924
|
|
|
16,518
|
|
|
52,524
|
|
|
33,992
|
Restructuring and
other charges
|
|
|
526
|
|
|
1,632
|
|
|
3,126
|
|
|
3,119
|
Impairment
charges
|
|
|
201
|
|
|
–
|
|
|
201
|
|
|
2,615
|
Total operating
expenses
|
|
|
114,344
|
|
|
83,381
|
|
|
224,075
|
|
|
163,968
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
|
|
6,466
|
|
|
6,167
|
|
|
2,314
|
|
|
7,397
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
|
(7,064)
|
|
|
(3,179)
|
|
|
(14,200)
|
|
|
(6,214)
|
Other (expense)
income, net
|
|
|
(5,661)
|
|
|
634
|
|
|
(6,658)
|
|
|
1,103
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before
income taxes
|
|
|
(6,259)
|
|
|
3,622
|
|
|
(18,544)
|
|
|
2,286
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
|
15,008
|
|
|
1,315
|
|
|
12,791
|
|
|
2,202
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
|
$
|
(21,267)
|
|
$
|
2,307
|
|
$
|
(31,335)
|
|
$
|
84
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (loss) income
per share
|
|
$
|
(0.61)
|
|
$
|
0.07
|
|
$
|
(0.90)
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted (loss) income
per share
|
|
$
|
(0.61)
|
|
$
|
0.07
|
|
$
|
(0.90)
|
|
$
|
0.00
|
Table 1:
Reconciliation of three and six months ended June 30, 2016 and 2015
reported contract gross profit and
contract gross margin to non-GAAP contract gross profit and
non-GAAP contract gross margin
|
|
|
Non-GAAP
Measures
|
|
Three Months
Ended
|
|
Six Months
Ended
|
(Dollars in
thousands)
|
|
June
30,
|
|
June
30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
Consolidated Contract
Revenue, as reported
|
|
$
116,457
|
|
$
85,226
|
|
$
219,295
|
|
$
160,358
|
Consolidated Cost of
Contract Revenue, as reported
|
|
82,214
|
|
64,668
|
|
161,577
|
|
122,807
|
Consolidated Contract
Gross Profit, as reported
|
|
34,243
|
|
20,558
|
|
57,718
|
|
37,551
|
|
|
|
|
|
|
|
|
|
add: Share-based
compensation expense
|
|
424
|
|
255
|
|
703
|
|
477
|
add: Purchase
accounting inventory adjustments
|
|
3,348
|
|
-
|
|
6,658
|
|
-
|
add: Purchase
accounting depreciation
|
|
610
|
|
1,179
|
|
1,310
|
|
1,461
|
Non-GAAP Consolidated
Contract Gross Profit
|
|
$
38,625
|
|
$
21,992
|
|
$
66,389
|
|
$
39,489
|
Consolidated Contract
Gross Margin, as reported
|
|
29.4%
|
|
24.1%
|
|
26.3%
|
|
23.4%
|
Non-GAAP Consolidated
Contract Gross Margin
|
|
33.2%
|
|
25.8%
|
|
30.3%
|
|
24.6%
|
|
|
|
|
|
|
|
|
|
DDS Segment Contract
Revenue, as reported
|
|
$
25,820
|
|
$
21,399
|
|
$
49,023
|
|
$
39,273
|
DDS Segment Cost of
Contract Revenue, as reported
|
|
18,363
|
|
16,003
|
|
35,533
|
|
29,708
|
DDS Segment Contract
Gross Profit, as reported
|
|
7,457
|
|
5,396
|
|
13,490
|
|
9,565
|
|
|
|
|
|
|
|
|
|
add: Share-based
compensation expense
|
|
306
|
|
146
|
|
542
|
|
302
|
add: Purchase
accounting depreciation
|
|
279
|
|
422
|
|
558
|
|
422
|
Non-GAAP DDS Segment
Contract Gross Profit
|
|
$
8,042
|
|
$
5,964
|
|
$
14,590
|
|
$
10,289
|
DDS Segment Contract
Gross Margin, as reported
|
|
28.9%
|
|
25.2%
|
|
27.5%
|
|
24.4%
|
Non-GAAP DDS Segment
Contract Gross Margin
|
|
31.1%
|
|
27.9%
|
|
29.8%
|
|
26.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
API Segment Contract
Revenue, as reported
|
|
$
65,447
|
|
$
39,997
|
|
$
120,149
|
|
$
77,845
|
API Segment Cost of
Contract Revenue, as reported
|
|
46,279
|
|
28,434
|
|
87,200
|
|
57,017
|
API Segment Contract
Gross Profit, as reported
|
|
19,168
|
|
11,563
|
|
32,949
|
|
20,828
|
|
|
|
|
|
|
|
|
|
add: Share-based
compensation expense
|
|
68
|
|
78
|
|
86
|
|
120
|
add: Purchase
accounting inventory adjustments
|
|
3,348
|
|
-
|
|
6,658
|
|
-
|
add: Purchase
accounting depreciation
|
|
135
|
|
135
|
|
270
|
|
270
|
Non-GAAP API Segment
Contract Gross Profit
|
|
$
22,719
|
|
$
11,776
|
|
$
39,963
|
|
$
21,218
|
API Segment Contract
Gross Margin, as reported
|
|
29.3%
|
|
28.9%
|
|
27.4%
|
|
26.8%
|
Non-GAAP API Segment
Contract Gross Margin
|
|
34.7%
|
|
29.4%
|
|
33.3%
|
|
27.3%
|
|
|
|
|
|
|
|
|
|
Drug Product Segment
Contract Revenue, as reported
|
|
$
25,190
|
|
$
23,830
|
|
$
50,123
|
|
$
43,240
|
Drug Product Segment
Cost of Contract Revenue, as reported
|
|
17,572
|
|
20,231
|
|
38,844
|
|
36,082
|
Drug Product Segment
Contract Gross Profit, as reported
|
|
7,618
|
|
3,599
|
|
11,279
|
|
7,158
|
|
|
|
|
|
|
|
|
|
add: Share-based
compensation expense
|
|
50
|
|
31
|
|
75
|
|
55
|
add: Purchase
accounting depreciation
|
|
196
|
|
623
|
|
482
|
|
770
|
Non-GAAP Drug Product
Segment Contract Gross Profit
|
|
$
7,864
|
|
$
4,253
|
|
$
11,836
|
|
$
7,983
|
Drug Product Segment
Contract Gross Margin, as reported
|
|
30.2%
|
|
15.1%
|
|
22.5%
|
|
16.6%
|
Non-GAAP Drug Product
Segment Contract Gross Margin
|
|
31.2%
|
|
17.8%
|
|
23.6%
|
|
18.5%
|
Table 2:
Reconciliation of the three and six months ended June 30, 2016 and
2015 reported net (loss) income and (loss) earnings per
diluted share to non-GAAP net income and non-GAAP diluted earnings
per share:
|
|
|
|
|
Albany Molecular
Research, Inc.
|
|
Condensed
Consolidated Statements of Operations (unaudited)
and
|
|
Reconciliation of
Non-GAAP Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
(Dollars in
thousands, except for per share data)
|
June 30,
2016
|
|
June 30,
2015
|
|
|
GAAP
|
|
Non-GAAP
Adjustments
|
|
Non-GAAP
|
|
GAAP
|
|
Non-GAAP
Adjustments
|
|
Non-GAAP
|
|
|
|
|
|
|
|
|
Contract
revenue
|
$
116,457
|
|
$
-
|
|
$
116,457
|
|
$
85,226
|
|
$
-
|
|
$
85,226
|
|
Recurring
royalties
|
4,353
|
|
-
|
|
4,353
|
|
4,322
|
|
-
|
|
4,322
|
|
Total
revenue
|
120,810
|
|
-
|
|
120,810
|
|
89,548
|
|
-
|
|
89,548
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of contract
revenue
|
82,214
|
|
(4,382)
|
(a) (b)
(c)
|
77,832
|
|
64,668
|
|
(1,434)
|
(a)
(b)
|
63,234
|
|
Technology incentive
award
|
-
|
|
-
|
|
-
|
|
179
|
|
-
|
|
179
|
|
Research and
development
|
3,479
|
|
-
|
|
3,479
|
|
384
|
|
-
|
|
384
|
|
Selling, general and
administrative
|
27,924
|
|
(9,379)
|
(d) (e) (f) (g) (h)
(i)
|
18,545
|
|
16,518
|
|
(2,819)
|
(d)(e)(f) (g) (h)
(i)
|
13,699
|
|
Restructuring and
other charges
|
526
|
|
(526)
|
(j)
|
-
|
|
1,632
|
|
(1,632)
|
(j)
|
-
|
|
Impairment
charges
|
201
|
|
(201)
|
(k)
|
-
|
|
–
|
|
|
|
-
|
|
Total operating
expenses
|
114,344
|
|
(14,488)
|
|
99,856
|
|
83,381
|
|
(5,885)
|
|
77,496
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
6,466
|
|
14,488
|
|
20,954
|
|
6,167
|
|
5,885
|
|
12,052
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
(7,064)
|
|
2,802
|
(l)
|
(4,262)
|
|
(3,179)
|
|
1,772
|
(l)
|
(1,407)
|
|
Other (expense)
income, net
|
(5,661)
|
|
6,243
|
(m)
(n)
|
582
|
|
634
|
|
(600)
|
(o)
|
34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)
income before income taxes
|
(6,259)
|
|
23,533
|
|
17,274
|
|
3,622
|
|
7,057
|
|
10,679
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
15,008
|
|
(10,392)
|
(p)
(q)
|
4,616
|
|
1,315
|
|
1,964
|
(p)
|
3,279
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
$
(21,267)
|
|
$
33,925
|
|
$
12,658
|
|
$
2,307
|
|
$
5,093
|
|
$
7,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (loss) earnings
per share
|
$
(0.61)
|
|
$
0.97
|
|
$
0.36
|
|
$
0.07
|
|
$
0.16
|
|
$
0.23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted (loss)
earnings per share
|
$
(0.61)
|
|
$
0.97
|
(r)
|
$
0.36
|
|
$
0.07
|
|
$
0.15
|
(r)
|
$
0.22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Purchase accounting
depreciation in 2016 and 2015 of $610 and $1,179,
respectively.
|
|
|
|
|
|
|
|
(b)
|
Share-based
compensation expense in 2016 and 2015 of $424 and $255,
respectively.
|
|
|
|
|
|
|
|
(c)
|
Purchase accounting
inventory adjustments associated with the acquisition of Gadea in
2016 of $3,348.
|
|
|
|
|
|
|
(d)
|
Purchase accounting
depreciation and amortization in 2016 and 2015 of $1,934 and $694,
respectively.
|
|
|
|
|
|
|
(e)
|
Share-based
compensation expense in 2016 and 2015 of $2,050 and $1,210,
respectively.
|
|
|
|
|
|
|
|
(f)
|
Business acquisition
costs in 2016 and 2015 of $3,306 and $582, respectively.
|
|
|
|
|
|
|
|
|
(g)
|
Executive transition
charges in 2016 and 2015 of $7 and $145, respectively.
|
|
|
|
|
|
|
|
|
(h)
|
ERP implementation
costs in 2016 and 2015 of $1,482 and $94, respectively.
|
|
|
|
|
|
|
|
|
(i)
|
Non-recurring
professional fees in 2016 and 2015 of $600 and $94, respectively,
associated with the defense of an open securities litigation matter
.
|
|
(j)
|
Restructuring and
other charges in 2016 relate primarily to the Company's Singapore
and Holywell, UK facilities, partially offset by a reduction in
lease obligation reserves
|
|
associated with a
closed facility acquired in conjunction with the Cedarburg
Pharmaceuticals acquisition.
|
|
|
|
|
|
|
|
Restructuring and
other charges in 2015 relate primarily to the closure of the
company's Holywell, UK facility.
|
|
|
|
|
|
(k)
|
Impairment charges in
2016 relate to intellectual property assets associated with one of
the Company's proprietary drug discovery programs.
|
|
|
(l)
|
Represents
debt-related non-cash interest and amortization charges.
|
|
|
|
|
|
|
|
|
(m)
|
Gain on sale of
Syracuse, NY facility, which was closed in 2014.
|
|
|
|
|
|
|
|
|
(n)
|
Loss on hedge
transaction associated with the Euticals purchase price of $6,401
in 2016.
|
|
|
|
|
|
|
|
(o)
|
Insurance recovery -
business interruption in 2015.
|
|
|
|
|
|
|
|
|
|
|
(p)
|
Income tax effects of
non-GAAP adjustments included in income before income taxes in 2016
and 2015
|
|
|
|
|
|
|
(q)
|
Income tax expense
related to the establishment of a valuation allowance on the
Company's U.S. deferred tax assets of $8,467 in 2016.
|
|
|
(r)
|
Weighted average
share counts utilized in computing non-GAAP diluted EPS in 2016 and
2015 of 35,653,934 and 33,226,098, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Albany Molecular
Research, Inc.
|
|
Condensed
Consolidated Statements of Operations (unaudited)
and
|
|
Reconciliation of
Non-GAAP Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
(Dollars in
thousands, except for per share data)
|
|
|
June 30,
2016
|
|
June 30,
2015
|
|
|
|
|
GAAP
|
|
Non-GAAP
Adjustments
|
|
Non-GAAP
|
|
GAAP
|
|
Non-GAAP
Adjustments
|
|
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
Contract
revenue
|
|
|
$
219,295
|
|
$
-
|
|
$
219,295
|
|
$
160,358
|
|
$
-
|
|
$
160,358
|
|
Recurring
royalties
|
|
|
7,094
|
|
-
|
|
7,094
|
|
11,007
|
|
-
|
|
11,007
|
|
Total
revenue
|
|
|
226,389
|
|
-
|
|
226,389
|
|
171,365
|
|
-
|
|
171,365
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of contract
revenue
|
|
|
161,577
|
|
(8,671)
|
(a) (b)
(c)
|
152,906
|
|
122,807
|
|
(1,938)
|
(a) (b)
|
120,869
|
|
Technology incentive
award
|
|
|
-
|
|
-
|
|
-
|
|
560
|
|
-
|
|
560
|
|
Research and
development
|
|
|
6,647
|
|
-
|
|
6,647
|
|
875
|
|
-
|
|
875
|
|
Selling, general and
administrative
|
|
|
52,524
|
|
(15,605)
|
(d) (e) (f) (g)
(h)
|
36,919
|
|
33,992
|
|
(7,575)
|
(d) (e) (f) (g) (h)
(i)
|
26,417
|
|
Restructuring and
other charges
|
|
|
3,126
|
|
(3,126)
|
(j)
|
-
|
|
3,119
|
|
(3,119)
|
(j)
|
-
|
|
Impairment
charges
|
|
|
201
|
|
(201)
|
(k)
|
-
|
|
2,615
|
|
(2,615)
|
(k)
|
-
|
|
Total operating
expenses
|
|
|
224,075
|
|
(27,603)
|
|
196,472
|
|
163,968
|
|
(15,247)
|
|
148,721
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
|
|
2,314
|
|
27,603
|
|
29,917
|
|
7,397
|
|
15,247
|
|
22,644
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
|
(14,200)
|
|
5,574
|
|
(8,626)
|
|
(6,214)
|
|
3,526
|
|
(2,688)
|
|
Other (expense)
income, net
|
|
|
(6,658)
|
|
6,243
|
(m)
(n)
|
(415)
|
|
1,103
|
|
(600)
|
(o)
|
503
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income
before income taxes
|
|
|
(18,544)
|
|
39,420
|
|
20,876
|
|
2,286
|
|
18,173
|
|
20,459
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
|
12,791
|
|
(6,945)
|
(p)
(q)
|
5,846
|
|
2,202
|
|
4,500
|
(p)
|
6,702
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
|
|
$
(31,335)
|
|
$
46,365
|
|
$
15,030
|
|
$
84
|
|
$
13,673
|
|
$
13,757
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (loss) earnings
per share
|
|
|
$
(0.90)
|
|
$
1.33
|
|
$
0.43
|
|
$
-
|
|
$
0.43
|
|
$
0.43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted (loss)
earnings per share
|
|
|
$
(0.90)
|
|
$
1.32
|
(r)
|
$
0.42
|
|
$
-
|
|
$
0.42
|
(r)
|
$
0.42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Purchase accounting
depreciation in 2016 and 2015 of $1,310 and $1,461,
respectively.
|
|
|
|
|
|
|
|
(b)
|
Share-based
compensation expense in 2016 and 2015 of $703 and $477,
respectively.
|
|
|
|
|
|
|
|
(c)
|
Purchase accounting
inventory adjustments associated with the acquisition of Gadea in
2016 of $6,658.
|
|
|
|
|
|
|
(d)
|
Purchase accounting
depreciation and amortization in 2016 and 2015 of $3,502 and
$1,415, respectively.
|
|
|
|
|
|
|
(e)
|
Share-based
compensation expense in 2016 and 2015 of $3,911 and $2,543,
respectively.
|
|
|
|
|
|
|
|
(f)
|
Business acquisition
costs in 2016 and 2015 of $5,480 and $1,672,
respectively.
|
|
|
|
|
|
|
|
|
(g)
|
Executive transition
charges in 2016 and 2015 of $7 and $936, respectively.
|
|
|
|
|
|
|
|
|
(h)
|
ERP implementation
costs in 2016 and 2015 of $2,015 and $298, respectively.
|
|
|
|
|
|
|
|
|
(i)
|
Non-recurring
professional fees in 2016 and 2015 of $600 and $711, respectively,
primarily associated with the defense of an open securities
litigation matter.
|
|
(j)
|
Restructuring and
other charges in 2016 relate primarily to the Company's Singapore
and Holywell, UK facilities, partially offset by a reduction in
lease obligation reserves
|
|
associated with a
closed facility acquired in conjunction with the Cedarburg
Pharmaceuticals acquisition.
|
|
|
|
|
|
|
|
Restructuring and
other charges in 2015 relate primarily to the closure of the
Company's Holywell, UK facility.
|
|
|
|
|
|
|
(k)
|
Impairment charges in
2016 relate to intellectual property assets associated with one of
the Company's proprietary drug discovery programs.
|
|
|
|
Impairment charges in
2015 relate to property, plant, and equipment charges associated
with the closure of the Company's Holywell, UK facility.
|
|
|
(l)
|
Represents
debt-related non-cash interest and amortization charges.
|
|
|
|
|
|
|
|
|
(m)
|
Gain on sale of
Syracuse, NY facility, which was closed in 2014.
|
|
|
|
|
|
|
|
|
(n)
|
Loss on hedge
transaction associated with the Euticals purchase price of $6,401
in 2016.
|
|
|
|
|
|
|
|
(o)
|
Insurance recovery -
business interruption in 2015.
|
|
|
|
|
|
|
|
|
|
|
(p)
|
Income tax effects of
non-GAAP adjustments included in income before income taxes in 2016
and 2015
|
|
|
|
|
|
|
(q)
|
Income tax expense
related to the establishment of a valuation allowance on the
Company's U.S. deferred tax assets of $8,467 in 2016.
|
|
|
(r)
|
Weighted average
share counts utilized in computing non-GAAP diluted EPS in 2016 and
2015 of 35,677,263 and 33,039,242, respectively.
|
|
|
Table 3:
Reconciliation of the three and six months ended June 30, 2016 and
2015 reported net (loss) income to adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Three months
ended
|
|
Six months
ended
|
|
Six months
ended
|
|
|
June 30, 2016
|
|
June 30, 2015
|
|
June 30, 2016
|
|
June 30, 2015
|
Net (loss) income, as
reported
|
|
$
(21,267)
|
|
$
2,307
|
|
$
(31,335)
|
|
$
84
|
Income tax
expense
|
|
15,008
|
|
1,315
|
|
12,791
|
|
2,202
|
Interest expense,
net
|
|
7,064
|
|
3,179
|
|
14,200
|
|
6,214
|
Depreciation and
amortization
|
|
7,758
|
|
6,276
|
|
16,282
|
|
11,762
|
EBITDA
|
|
8,563
|
|
13,077
|
|
11,938
|
|
20,262
|
Impairment
charges
|
|
201
|
|
–
|
|
201
|
|
2,615
|
Restructuring and
other charges
|
|
526
|
|
1,632
|
|
1,984
|
|
3,119
|
Executive transition
costs
|
|
7
|
|
145
|
|
7
|
|
936
|
Business acquisition
costs
|
|
3,306
|
|
582
|
|
5,480
|
|
1,672
|
Purchase accounting
inventory adjustments
|
|
3,348
|
|
-
|
|
6,658
|
|
-
|
ERP Implementation
costs
|
|
1,482
|
|
94
|
|
2,105
|
|
298
|
Non-recurring
professional fees
|
|
600
|
|
94
|
|
600
|
|
711
|
Share-based
compensation expense
|
|
2,474
|
|
1,465
|
|
4,614
|
|
3,020
|
Insurance recovery -
business interruption
|
|
-
|
|
(600)
|
|
-
|
|
(600)
|
Gain on sale of
facility
|
|
(158)
|
|
-
|
|
(158)
|
|
-
|
Unrealized loss on
hedge transaction
|
|
6,401
|
|
-
|
|
6,401
|
|
-
|
Adjusted
EBITDA
|
|
$
26,750
|
|
$
16,489
|
|
$
39,830
|
|
$
32,033
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/amri-announces-second-quarter-2016-results-300309038.html
SOURCE AMRI