Emergent BioSolutions Inc. (NYSE: EBS) reported financial results
for the quarter and year ended December 31, 2018.
FINANCIAL HIGHLIGHTS
(in millions) |
Q4
2018(unaudited) |
Q4
2017(unaudited) |
Total Revenues |
$270.7 |
$193.8 |
Pretax Income |
$3.6 |
$51.9 |
Net Income (Loss) |
($3.4) |
$33.9 |
Adjusted Net Income (1) |
$38.3 |
$37.8 |
EBITDA (1) |
$36.1 |
$65.2 |
Adjusted EBITDA (1) |
$75.0 |
$67.1 |
|
|
|
(in millions) |
Full Year
2018(unaudited) |
Full Year
2017 |
Total Revenues |
$782.4 |
$560.9 |
Pretax Income |
$81.5 |
$118.6 |
Net Income |
$62.7 |
$82.6 |
Adjusted Net Income (1) |
$119.6 |
$95.7 |
EBITDA (1) |
$152.7 |
$166.0 |
Adjusted EBITDA (1) |
$198.8 |
$175.7 |
|
|
|
2018 FINANCIAL PERFORMANCE
(I) Quarter Ended December 31, 2018
(Unaudited)
Revenues
Total Revenues
For Q4 2018, total revenues were $270.7 million, an increase of
40% over 2017. Total revenues reflect a significant increase in
product sales due to the contribution of recently acquired
products.
Product Sales
For Q4 2018, product sales were $217.4 million, an increase of
$55.7 million or 34% as compared to 2017. The increase primarily
reflects sales of NARCAN® (naloxone HCl) Nasal Spray, Vivotif®
(Typhoid Vaccine Live Oral Ty21a) and Vaxchora® (Cholera Vaccine,
Live, Oral), all acquired in October 2018.
(in millions)(unaudited) |
Three Months
Ended December 31, |
2018 |
2017 |
% Change |
Product Sales |
|
|
|
BioThrax® |
$134.3 |
$107.0 |
26% |
NARCAN® (naloxone HCl) nasal
spray |
41.7 |
-- |
-- |
Other |
41.4 |
54.7 |
(24%) |
Total Product Sales |
$217.4 |
$161.7 |
34% |
Contract Manufacturing
For Q4 2018, revenue from the Company’s contract manufacturing
operations was $26.9 million, an increase of $10.7 million or 66%
as compared to 2017. The increase primarily reflects increased
manufacturing services for existing commercial customers at the
Company’s Camden site.
Contracts and Grants
For Q4 2018, revenue from the Company’s development-based
contracts and grants was $26.4 million, an increase of $10.5
million or 66% as compared to 2017. The increase primarily reflects
increased R&D activities related to certain ongoing funded
development programs, most notably NuThrax™ (anthrax vaccine
adsorbed with CPG 7909 adjuvant).
Operating Expenses
Cost of Product Sales and Contract
Manufacturing
For Q4 2018, cost of product sales and contract manufacturing
was $113.2 million, an increase of $46.7 million or 70% as compared
to 2017. The increase primarily reflects the impact of an increase
in sales of NARCAN® (naloxone HCl) Nasal Spray, which was acquired
in the fourth quarter of 2018, and raxibacumab, which was acquired
in the fourth quarter of 2017.
Research and Development (Gross and Net)
For Q4 2018, gross R&D expenses were $52.0 million, an
increase of $23.5 million or 82% as compared to 2017. The increase
primarily reflects an increase in costs associated with contract
development services associated with NuThrax™ (anthrax vaccine
adsorbed with CPG 7909 adjuvant).
For Q4 2018, net R&D expense, which reflects investments
made in development programs that are not currently funded in whole
or in part by third-party partners and is calculated as gross
research and development expenses minus contracts and grants
revenue, was $25.6 million, an increase of $13.0 million or 103% as
compared to 2017. The increase primarily reflects investment in
process improvements related to ACAM2000®, (Smallpox (Vaccinia)
Vaccine, Live) at the Canton site and increased costs associated
with the Phase 2 clinical trial for the FLU-IGIV program. The Q4
2018 net R&D expense was 10% of net revenue (total revenue less
contracts & grants) compared to 7% of net revenue in Q4
2017.
(in millions)(unaudited) |
Three Months
Ended December 31, |
2018 |
2017 |
% Change |
Research and Development
Expenses |
$52.0 |
$28.5 |
82% |
Adjustments: |
- Contracts and grants
revenue |
$26.4 |
$15.9 |
66% |
Net Research and Development
Expenses |
$25.6 |
$12.6 |
103% |
Adjusted Revenue (Total Revenue
less Contracts and Grants Revenue) |
$244.3 |
$177.9 |
37% |
Net R&D as % of Adjusted Revenue (Net
R&D Margin) |
10% |
7% |
NA |
Selling, General and Administrative
For Q4 2018, selling, general and administrative expenses were
$81.0 million, an increase of $39.2 million or 94% as compared to
2017. The increase primarily reflects higher transaction and
integration related costs associated with the PaxVax and Adapt
Pharma acquisitions.
Amortization of Intangible Assets
The Company has elected to reclassify amortization of intangible
assets for Q4 2018 from cost of product sales and contract
manufacturing to amortization of intangible assets, and therefore
the Q4 2017 amounts have also been reclassified to conform to the
current period presentation on the Company’s consolidated
statements of operations.
For Q4 2018, amortization of intangible assets was $13.3 million
versus $3.9 million as compared to 2017. The increase entirely
reflects higher non-cash intangible asset amortization costs
associated with the PaxVax and Adapt Pharma acquisitions, which
both closed in the fourth quarter of 2018.
Income Taxes
For Q4 2018, the provision for income tax expense in the amount
of $7.0 million includes the impact of non-deductible acquisition
transaction costs and other permanent items. The effective tax rate
for Q4 2018 is not meaningful given the low level of pre-tax income
for the quarter.
Net Income (Loss) & Adjusted Net Income
For Q4 2018, the Company recorded a net loss of $3.4 million, or
$0.07 per diluted share, versus net income of $33.9 million, or
$0.67 per diluted share, in 2017. (2)
For Q4 2018, the Company recorded adjusted net income of $38.3
million, or $0.75 per diluted share, versus adjusted net income of
$37.8 million, or $0.74 per diluted share, in 2017. (1) (2)
EBITDA & Adjusted EBITDA
For Q4 2018, the Company recorded EBITDA of $36.1 million versus
$65.2 million in 2017. (1)
For Q4 2018, the Company recorded adjusted EBITDA of $75.0
million versus $67.1 million in 2017. (1)
(II) Year Ended December 31, 2018
(Unaudited)
Revenues
Total Revenues
For full year 2018, total revenues were $782.4 million, an
increase of $221.5 million or 39% over 2017. Total revenues reflect
significant increases in both product sales due to the contribution
of recently acquired products and contract development and
manufacturing services revenue.
Product Sales
For full year 2018, product sales were $606.5 million, an
increase of $185.0 million or 44% as compared to 2017. The increase
primarily reflects a full year of sales of ACAM2000®, (Smallpox
(Vaccinia) Vaccine, Live) and raxibacumab, both acquired in the
fourth quarter of 2017, and NARCAN® (naloxone HCl) Nasal Spray,
which was acquired in the fourth quarter of 2018.
(in millions)(unaudited) |
Year
Ended December 31, |
2018 |
2017 |
% Change |
Product Sales |
|
|
|
BioThrax® |
$278.0 |
$286.6 |
(3%) |
ACAM2000® |
116.7 |
11.5 |
915% |
Other |
211.8 |
123.4 |
72% |
Total Product Sales |
$606.5 |
$421.5 |
44% |
Contract Manufacturing
For full year 2018, revenue from the Company’s contract
manufacturing operations was $98.9 million, an increase of $30.0
million or 44% as compared to 2017. The increase primarily reflects
the completion of a milestone related to the expansion of certain
contract manufacturing capabilities at the Company’s Lansing site,
fill/finish services provided to third parties, and increased
manufacturing services for commercial customers at the Company’s
Canton site.
Contracts and Grants
For full year 2018, revenue from the Company’s development-based
contracts and grants was $77.0 million, an increase of $6.5 million
or 9% as compared to 2017. The increase primarily reflects an
increase in R&D activities related to SIAN, the Company’s
drug-device combination product candidate (antidote spray device)
for the treatment of known or suspected acute cyanide poisoning as
well as work related to ACAM2000®, (Smallpox (Vaccinia) Vaccine,
Live), which was acquired in the fourth quarter of 2017.
Operating Expenses
Cost of Product Sales and Contract
Manufacturing
For full year 2018, cost of product sales and contract
manufacturing was $322.3 million, an increase of $134.6 million or
72% as compared to 2017. The increase primarily reflects the impact
of an increase in Other product sales associated principally with a
full year of sales of both ACAM2000®, (Smallpox (Vaccinia) Vaccine,
Live) and raxibacumab, which were acquired in the fourth quarter of
2017, and NARCAN® (naloxone HCl) Nasal Spray, which was acquired in
the fourth quarter of 2018.
Research and Development (Gross and Net)
For full year 2018, gross R&D expenses were $142.8 million,
an increase of $45.4 million or 47% as compared to 2017. The
increase primarily reflects an increase in costs associated with
development programs related to the Company’s recently acquired
product candidates.
For full year 2018, net R&D expense was $65.8 million, an
increase of $38.9 million or 145% as compared to 2017. The increase
primarily reflects investment in manufacturing development
activities related to ACAM2000®, (Smallpox (Vaccinia) Vaccine,
Live) and the FLU-IGIV program. The full year 2018 net R&D
expense was 9% of net revenue (total revenue less contracts &
grants) compared to 5% of net revenue in 2017.
(in millions)(unaudited) |
Year
EndedDecember 31, |
2018 |
2017 |
% Change |
Research and Development
Expenses |
$142.8 |
$97.4 |
47% |
Adjustments: |
- Contracts and grants
revenue |
$77.0 |
$70.5 |
9% |
Net Research and Development
Expenses |
$65.8 |
$26.9 |
145% |
Adjusted Revenue (Total Revenue
less Contracts and Grants Revenue) |
$705.4 |
$490.4 |
44% |
Net R&D as % of Adjusted Revenue (Net
R&D Margin) |
9% |
5% |
NA |
Selling, General and Administrative
For full year 2018, selling, general and administrative expenses
were $202.5 million, an increase of $59.6 million or 42% as
compared to 2017. The increase primarily reflects an increase in
acquisition-related costs (transaction and integration) associated
with the PaxVax and Adapt acquisitions, compensation related costs
from increased headcount and share-based compensation expense, and
infrastructure improvement initiatives primarily related to IT
systems.
Amortization of Intangible Assets
The Company has elected to reclassify amortization of intangible
assets for full year 2018 from cost of product sales and contract
manufacturing to amortization of intangible assets, and therefore
the 2017 amounts have been reclassified to conform to the current
period presentation on the Company’s consolidated statements of
operations.
For full year 2018, amortization of intangible assets was $25.0
million versus $8.6 million as compared to 2017. The increase
entirely reflects higher non-cash intangible asset amortization
costs associated with the PaxVax and Adapt Pharma acquisitions,
which both closed in the fourth quarter of 2018.
Income Taxes
For full year 2018, the provision for income tax expense in the
amount of $18.8 million includes the impact of state taxes, GILTI
(Global Intangible Low Income Tax), acquisition transaction costs
and other non-deductible items. These are partially offset by the
benefit relating to finalizing the impact of Tax Reform and the
stock option deduction, resulting in an effective tax rate of
23%.
Net Income & Adjusted Net Income
For full year 2018, the Company recorded net income of $62.7
million, or $1.22 per diluted share, versus net income of $82.6
million, or $1.71 per diluted share, in 2017. (2)
For full year 2018, the Company recorded adjusted net income of
$119.6 million, or $2.33 per diluted share, versus adjusted net
income of $95.7 million, or $1.90 per diluted share, in 2017. (1)
(2)
EBITDA & Adjusted EBITDA
For full year 2018, the Company recorded EBITDA of $152.7
million versus $166.0 million in 2017. (1)
For full year 2018, the Company recorded adjusted EBITDA of
$198.8 million versus $175.7 million in 2017. (1)
2019 FINANCIAL FORECAST (Reaffirmed)For full
year 2019, the company reaffirms its expectation of the following
forecasted financial metrics:
(in millions) |
FULL YEAR 2019
(As of 2/21/2019) |
Total Revenues |
$1,060 --
$1,140 |
Net Income (1) |
$80 --
$110 |
Adjusted Net Income (1) |
$150 --
$180 |
EBITDA (1) |
$255 --
$285 |
Adjusted EBITDA (1) |
$280 --
$310 |
The company’s financial forecast for 2019 includes the impact of
the following items:
- continued deliveries of BioThrax to the Strategic National
Stockpile (SNS) under the current procurement contract with the
Centers for Disease Control and Prevention (CDC), (the contract and
the SNS are now managed by the Office of the Assistant Secretary
for Preparedness and Response (ASPR));
- initial deliveries of NuThrax™ (anthrax vaccine adsorbed with
CPG 7909 adjuvant) to the SNS following expected Emergency Use
Authorization pre-approval by the U.S. Food and Drug Administration
(FDA) under the company’s current development and procurement
contract with the Biomedical Advanced Research and Development
Authority (BARDA);
- full year sales of NARCAN Nasal Spray, Vaxchora® (Cholera
Vaccine, Live, Oral), and Vivotif® (Typhoid Vaccine Live Oral
Ty21a), all of which were acquired in the fourth quarter of
2018;
- completion of deliveries of ACAM2000 to the SNS under the prior
contract as well as initiation of new deliveries to the SNS under
the anticipated follow-on procurement contract with the ASPR;
- deliveries of raxibacumab to the SNS under the current
procurement contract with BARDA;
- domestic and international sales of the other medical
countermeasures that comprise Other Product sales;
- continued CDMO services revenue;
- increased Contract & Grant revenue due to anticipated
increased work related to development projects funded by third
parties; and
- continued investment in discretionary development projects
funded by the company targeting opportunities in medical
countermeasures for existing and emerging infectious diseases,
opioid overdose and other public health threats.
The outlook for 2019 does not include estimates for potential
new corporate development or other M&A transactions.
Q1 2019 REVENUE FORECAST (Reaffirmed)For Q1
2019, the company reaffirms its expectation of total revenues of
$185 to $205 million.
FOOTNOTES
(1) See “Reconciliation of Net Income (Loss) to Adjusted
Net Income, EBITDA and Adjusted EBITDA” for a definition of terms
and a reconciliation table.(2) See “Calculation of Diluted Earnings
Per Share.”
CONFERENCE CALL AND WEBCAST INFORMATION
Company management will host a conference call at 5:00 pm
(Eastern Time) today, February 21, 2019, to discuss these financial
results. This conference call can be accessed live by telephone or
through Emergent’s website:
Live
Teleconference Information:Dial in: [US]
(855) 766-6521; [International] (262)
912-6157Conference ID: 2299983 |
|
Live
Webcast Information:Visit
https://edge.media-server.com/m6/p/ow37uwh9 for the live webcast
feed. |
A replay of the call can be accessed at
www.emergentbiosolutions.com under “Investors.”
ABOUT EMERGENT BIOSOLUTIONS INC.
Emergent BioSolutions Inc. is a global life sciences company
seeking to protect and enhance life by focusing on providing
specialty products for civilian and military populations that
address accidental, deliberate, and naturally occurring public
health threats. We aspire to be a Fortune 500 company recognized
for protecting and enhancing life, driving innovation, and living
our values. Additional information about the company may be found
at www.emergentbiosolutions.com. Find us on LinkedIn and follow us
on Twitter @emergentbiosolu and Instagram @life_at_emergent.
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
forecasts, statements regarding the anticipated financial
implications of our acquisitions of PaxVax and Adapt Pharma and any
other statements containing the words "will," "believes,"
"expects," "anticipates," "intends," "plans," "targets,"
"forecasts," "estimates" and similar expressions in conjunction
with, among other things, discussions of the Company's outlook,
financial performance or financial condition, product sales,
government development or procurement contracts or awards,
government appropriations, manufacturing capabilities, continued
deliveries of BioThrax to the SNS, Emergency Use Authorization
(EUA) pre-approval for NuThrax and initial deliveries of NuThrax to
the SNS following EUA pre-approval, anticipated sales of NARCAN
Nasal Spray, Vivotif and Vaxchora, completion of deliveries under a
previous commitment and initiation of new deliveries of ACAM2000 to
the SNS under an anticipated follow-on contract, and development
projects funded by third parties 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 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 FDA within the anticipated timeframe, if at all;
availability of funding for our U.S. government grants and
contracts; our ability to successfully integrate and develop the
operations, products or product candidates, programs, and personnel
of any entities, businesses or products that we acquire, including
our recently completed acquisitions of PaxVax and Adapt; our
ability to complete expected deliveries of BioThrax, ACAM2000 and
raxibacumab; our ability to establish a multi-year follow-on
contract for ACAM2000; our ability to advance the technology
transfer of raxibacumab to the Company’s Bayview facility; our
ability to identify and acquire or in-license products or product
candidates that satisfy our selection criteria; our ability and the
ability of our collaborators to protect our intellectual property
rights; whether anticipated synergies and benefits from an
acquisition or in-license will be realized within expected time
periods, if at all; our ability to utilize our manufacturing
facilities and expand our capabilities; our ability and the ability
of our contractors and suppliers to maintain compliance with
Current Good Manufacturing Practices and other regulatory
obligations; the results of regulatory inspections; possible other
future material legal proceedings; the success of our ongoing and
planned development programs; the timing and results of clinical
trials; the timing of and our ability to obtain and maintain
regulatory approvals for our product candidates; and our
commercialization, marketing and manufacturing capabilities and
strategy. The foregoing sets forth many, but not all, of the
factors that could cause actual results to differ from our
expectations in any forward-looking statement. Investors should
consider this cautionary statement, as well as the risk factors
identified in our periodic reports filed with the Securities and
Exchange Commission, when evaluating our forward-looking
statements.
Investor
ContactRobert BurrowsVice President, Investor Relations(o)
240/631-3280; (m) 240/413-1917burrowsr@ebsi.com |
Media
ContactLynn KiefferVice President, Corporate
Communications(o) 240/631-3391kiefferl@ebsi.com |
FINANCIAL STATEMENTS FOLLOW
|
Emergent
BioSolutions Inc. and Subsidiaries |
Consolidated
Balance Sheets |
(in
millions, except per share data) |
|
|
|
|
|
|
|
December 31, 2018 |
|
December 31, 2017 |
ASSETS |
|
(Unaudited) |
|
|
|
Current assets: |
|
|
|
|
|
Cash and
cash equivalents |
$ |
112.2 |
|
$ |
178.3 |
Restricted cash |
|
0.2 |
|
|
1.0 |
Accounts
receivable, net |
|
262.5 |
|
|
143.7 |
Inventories |
|
205.8 |
|
|
142.8 |
Income
tax receivable, net |
|
8.6 |
|
|
2.4 |
Prepaid
expenses and other current assets |
|
31.5 |
|
|
17.2 |
Total
current assets |
|
620.8 |
|
|
485.4 |
Property,
plant and equipment, net |
|
510.2 |
|
|
407.2 |
Intangible assets, net |
|
761.6 |
|
|
119.6 |
In-process research and development |
|
50.0 |
|
|
-- |
Goodwill |
|
259.7 |
|
|
49.1 |
Deferred
tax assets, net |
|
13.4 |
|
|
2.8 |
Other
assets |
|
13.7 |
|
|
6.1 |
Total assets |
$ |
2,229.4 |
|
$ |
1,070.2 |
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Accounts
payable |
$ |
80.7 |
|
$ |
41.8 |
Accrued
expenses and other current liabilities |
|
30.7 |
|
|
4.8 |
Accrued
compensation |
|
58.2 |
|
|
37.9 |
Long-term
indebtedness, current portion |
|
10.1 |
|
|
-- |
Contingent consideration, current portion |
|
5.6 |
|
|
2.4 |
Income
taxes payable, net |
|
4.5 |
|
|
-- |
Deferred
revenue, current portion |
|
10.6 |
|
|
13.2 |
Total
current liabilities |
|
200.4 |
|
|
100.1 |
Contingent consideration, net of current portion |
|
54.4 |
|
|
9.9 |
Long-term
indebtedness, net of current portion |
|
784.5 |
|
|
13.5 |
Deferred
tax liability, net |
|
67.5 |
|
|
-- |
Income
taxes payable |
|
11.2 |
|
|
12.5 |
Deferred
revenue, net of current portion |
|
62.5 |
|
|
17.3 |
Other
liabilities |
|
38.0 |
|
|
4.6 |
Total
liabilities |
|
1,218.5 |
|
|
157.9 |
|
|
|
|
|
|
Stockholders’
equity: |
|
|
|
|
|
Preferred
stock, $0.001 par value; 15.0 shares authorized, 0 shares issued
and outstanding at both December 31, 2018 and 2017 |
|
-- |
|
|
-- |
Common
stock, $0.001 par value; 200.0 shares authorized, 52.4 shares
issued and 51.2 shares outstanding at December 31, 2018; 50.6
shares issued and 49.4 shares outstanding at December 31, 2017 |
|
0.1 |
|
|
0.1 |
Treasury
stock, at cost, 1.2 common shares at both December 31, 2018 and
2017 |
|
(39.6) |
|
|
(39.5) |
Additional paid-in capital |
|
688.6 |
|
|
618.3 |
Accumulated other comprehensive loss |
|
(5.5) |
|
|
(3.7) |
Retained
earnings |
|
367.3 |
|
|
337.1 |
Total
stockholders’ equity |
|
1,010.9 |
|
|
912.3 |
Total
liabilities and stockholders’ equity |
$ |
2,229.4 |
|
$ |
1,070.2 |
|
|
|
|
|
|
|
Emergent
BioSolutions Inc. and Subsidiaries |
Consolidated
Statements of Operations |
(in
millions, except per share data) |
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
2018 |
|
2017 |
|
(Unaudited) |
Revenues: |
|
|
|
|
|
Product
sales |
$ |
217.4 |
|
$ |
161.7 |
Contract
manufacturing |
|
26.9 |
|
|
16.2 |
Contracts
and grants |
|
26.4 |
|
|
15.9 |
Total
revenues |
|
270.7 |
|
|
193.8 |
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
Cost of
product sales and contract manufacturing |
|
113.2 |
|
|
66.5 |
Research
and development |
|
52.0 |
|
|
28.5 |
Selling,
general and administrative |
|
81.0 |
|
|
41.8 |
Amortization of intangible assets |
|
13.3 |
|
|
3.9 |
Total operating
expenses |
|
259.5 |
|
|
140.7 |
|
|
|
|
|
|
Income from
operations |
|
11.2 |
|
|
53.1 |
|
|
|
|
|
|
Other income
(expense): |
|
|
|
|
|
Interest
expense |
|
(8.0) |
|
|
(0.9) |
Other
income (expense), net |
|
0.4 |
|
|
(0.3) |
Total other
expense, net |
|
(7.6) |
|
|
(1.2) |
|
|
|
|
|
|
Income before
provision for income taxes |
|
3.6 |
|
|
51.9 |
Provision for income
taxes |
|
7.0 |
|
|
18.0 |
Net income
(loss) |
$ |
(3.4) |
|
$ |
33.9 |
|
|
|
|
|
|
Net income
(loss) per share - basic |
$ |
(0.07) |
|
$ |
0.77 |
Net income
(loss) per share - diluted (1) |
$ |
(0.07) |
|
$ |
0.67 |
|
|
|
|
|
|
Weighted-average number of shares - basic |
|
50.9 |
|
|
44.3 |
Weighted-average number of shares - diluted |
|
50.9 |
|
|
51.0 |
|
|
|
|
|
|
|
Emergent
BioSolutions Inc. and Subsidiaries |
Consolidated
Statements of Operations |
(in
millions, except per share data) |
|
|
|
|
|
|
|
Year Ended December 31, |
|
2018 |
|
2017 |
|
(Unaudited) |
Revenues: |
|
|
|
|
|
Product
sales |
$ |
606.5 |
|
$ |
421.5 |
Contract
manufacturing |
|
98.9 |
|
|
68.9 |
Contracts
and grants |
|
77.0 |
|
|
70.5 |
Total
revenues |
|
782.4 |
|
|
560.9 |
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
Cost of
product sales and contract manufacturing |
|
322.3 |
|
|
187.7 |
Research
and development |
|
142.8 |
|
|
97.4 |
Selling,
general and administrative |
|
202.5 |
|
|
142.9 |
Amortization of intangible assets |
|
25.0 |
|
|
8.6 |
Total operating
expenses |
|
692.6 |
|
|
436.6 |
|
|
|
|
|
|
Income from
operations |
|
89.8 |
|
|
124.3 |
|
|
|
|
|
|
Other income
(expense): |
|
|
|
|
|
Interest
expense |
|
(9.9) |
|
|
(6.6) |
Other
income (expense), net |
|
1.6 |
|
|
0.9 |
Total other
expense, net |
|
(8.3) |
|
|
(5.7) |
|
|
|
|
|
|
Income before
provision for income taxes |
|
81.5 |
|
|
118.6 |
Provision for income
taxes |
|
18.8 |
|
|
36.0 |
Net
income |
$ |
62.7 |
|
$ |
82.6 |
|
|
|
|
|
|
Net income per
share - basic |
$ |
1.25 |
|
$ |
1.98 |
Net income per
share - diluted (1) |
$ |
1.22 |
|
$ |
1.71 |
|
|
|
|
|
|
Weighted-average number of shares - basic |
|
50.1 |
|
|
41.8 |
Weighted-average number of shares - diluted |
|
51.4 |
|
|
50.3 |
|
|
|
|
|
|
CALCULATION OF DILUTED EARNINGS PER SHARE
For both the three months and year ended December 31, 2018, net
income per diluted share was calculated using the “treasury
method.”
For both the three months and year ended December 31, 2017, net
income per diluted share is computed using the “if-converted”
method. Such a method only applies to results prior to November 14,
2017, the date the Company terminated conversion rights associated
with the 2.875% Convertible Senior Notes due 2021 (the Notes). This
method requires net income to be adjusted to add back interest
expense and amortization of debt issuance cost, both net of tax,
associated with the Notes. The following table details the
adjustments made in this calculation.
|
|
(in millions, except per share
value) |
Three Months
Ended December 31, |
2018 |
2017 |
Net Income (Loss) |
($3.4) |
$33.9 |
Adjustments: |
+ Interest expense, net of
tax |
-- |
0.2 |
+ Amortization of debt
issuance costs, net of tax |
-- |
0.1 |
Net Income (Loss), adjusted (“if
converted”)Net Income (Loss) Per Diluted Share,
adjusted (“if converted”) |
($3.4)($0.07) |
$34.2$0.67 |
Weighted Average Diluted
Shares |
50.9 |
51.0 |
|
|
|
(in millions, except per share
value) |
Year Ended
December 31, |
2018 |
2017 |
Net Income |
$62.7 |
$82.6 |
Adjustments: |
+ Interest expense, net of
tax |
-- |
2.6 |
+ Amortization of debt
issuance costs, net of tax |
-- |
0.7 |
Net Income, adjusted (“if
converted”)Net Income Per Diluted Share, adjusted
(“if converted”) |
$62.7$1.22 |
$85.9$1.71 |
Weighted Average Diluted
Shares |
51.4 |
50.3 |
|
|
|
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED NET
INCOME, EBITDA AND ADJUSTED EBITDA
This press release contains two financial measures
(Adjusted Net Income and EBITDA (Earnings Before Interest,
Taxes, Depreciation and Amortization), and Adjusted
EBITDA) that are considered “non-GAAP” financial measures
under applicable Securities and Exchange Commission rules and
regulations. These non-GAAP financial measures should be considered
supplemental to and not a substitute for financial information
prepared in accordance with generally accepted accounting
principles. The Company’s definition of these non-GAAP measures may
differ from similarly titled measures used by others. Adjusted Net
Income adjusts for specified items that can be highly variable or
difficult to predict, or reflect the non-cash impact of charges
resulting from purchase accounting (which are all tax effected
utilizing the statutory tax rate for the US). EBITDA reflects net
income excluding the impact of depreciation, amortization, interest
expense and provision for income taxes. Adjusted EBITDA also
excludes specified items that can be highly variable and the
non-cash impact of certain purchase accounting adjustments (which
are all tax effected utilizing the statutory tax rate for the US).
The Company views these non-GAAP financial measures as a means to
facilitate management’s financial and operational decision-making,
including evaluation of the Company’s historical operating results
and comparison to competitors’ operating results. These non-GAAP
financial measures reflect an additional way of viewing aspects of
the Company’s operations that, when viewed with GAAP results and
the reconciliations to the corresponding GAAP financial measure,
may provide a more complete understanding of factors and trends
affecting the Company’s business.
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 (Loss) to Adjusted Net
Income (Unaudited)
(in millions, except per share
value) |
Three Months
Ended December 31, |
2018 |
2017 |
Source |
Net Income (Loss) |
($3.4) |
$33.9 |
|
Adjustments: |
+ Acquisition-related costs
(transaction & integration) |
20.5 |
1.5 |
SG&A |
+ Non-cash amortization
charges |
13.9 |
4.1 |
IA Amort., Other Income |
+ Exit and disposal
costs |
-- |
-- |
SG&A |
+ Impact of purchase
accounting on inventory step-up |
18.4 |
0.4 |
COGS |
Tax effect |
(11.1) |
(2.1) |
|
Total Adjustments: |
41.7 |
3.9 |
|
Adjusted Net
IncomeAdjusted Net Income Per Diluted
Share |
$38.3$0.75 |
$37.8$0.74 |
|
|
|
|
|
(in millions, except per share
value) |
Year Ended
December 31, |
2018 |
2017 |
Source |
Net Income |
$62.7 |
$82.6 |
|
Adjustments: |
+ Acquisition-related costs
(transaction & integration) |
27.3 |
5.6 |
SG&A |
+ Non-cash amortization
charges |
25.9 |
10.3 |
IA Amort., Other Income |
+ Exit and disposal
costs |
0.4 |
1.5 |
SG&A |
+ Impact of purchase
accounting on inventory step-up |
18.4 |
2.6 |
COGS |
Tax effect |
(15.1) |
(7.0) |
|
Total Adjustments: |
56.9 |
13.1 |
|
Adjusted Net
IncomeAdjusted Net Income Per Diluted
Share |
$119.6$2.33 |
$95.7$1.90 |
|
|
|
|
|
(in millions) |
Full
Year Forecast |
2019F |
Source |
Net Income |
$80 -
$110 |
|
Adjustments: |
+ Acquisition-related costs
(transaction & integration) |
14 |
SG&A |
+ Non-cash amortization
charges |
64 |
IA Amort., Other Income |
+ Exit and disposal
costs |
4 |
SG&A |
+ Impact of purchase
accounting on inventory step-up |
7 |
COGS |
Tax effect |
(19) |
|
Total Adjustments: |
70 |
|
Adjusted Net Income |
$150 - $180 |
|
|
|
|
Reconciliation of Net Income to EBITDA and Adjusted
EBITDA (Unaudited)
(in millions, except per share
value) |
Three Months
Ended December 31, |
2018 |
2017 |
Net Income (Loss) |
($3.4) |
$33.9 |
Adjustments: |
+ Depreciation &
amortization |
24.5 |
12.4 |
+ Provision for income
taxes |
7.0 |
18.0 |
+ Total interest expense |
8.0 |
0.9 |
Total Adjustments |
39.5 |
31.3 |
EBITDA |
$36.1 |
$65.2 |
Additional
Adjustments: |
+ Acquisition-related costs
(transaction & integration) |
20.5 |
1.5 |
+ Exit and disposal
costs |
-- |
-- |
+ Impact of purchase
accounting on inventory step-up |
18.4 |
0.4 |
Total Additional
Adjustments |
38.9 |
1.9 |
Adjusted EBITDA |
$75.0 |
$67.1 |
|
|
|
(in millions, except per share
value) |
Year
Ended December 31, |
2018 |
2017 |
Net Income |
$62.7 |
$82.6 |
Adjustments: |
+ Depreciation &
Amortization |
61.3 |
40.8 |
+ Provision for Income
Taxes |
18.8 |
36.0 |
+ Total Interest Expense |
9.9 |
6.6 |
Total Adjustments |
90.0 |
83.4 |
EBITDA |
$152.7 |
$166.0 |
Additional
Adjustments: |
+ Acquisition-related costs
(transaction & integration) |
27.3 |
5.6 |
+ Exit and disposal
costs |
0.4 |
1.5 |
+ Impact of purchase
accounting on inventory step-up |
18.4 |
2.6 |
Total Additional
Adjustments |
46.1 |
9.7 |
Adjusted EBITDA |
$198.8 |
$175.7 |
|
|
|
(in millions) |
Full Year
Forecast |
2019F |
Net Income |
$80 - $110 |
Adjustments: |
+ Depreciation &
amortization |
106 |
+ Provision for income
taxes |
30 |
+ Total interest expense |
39 |
Total Adjustments |
175 |
EBITDA |
$255 - $285 |
Additional
Adjustments: |
+ Acquisition-related costs
(transaction & integration) |
14 |
+ Exit and disposal
costs |
4 |
+ Impact of purchase
accounting on inventory step-up |
7 |
Total Additional
Adjustments |
25 |
Adjusted EBITDA |
$280 - $310 |
|
|
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