Emergent BioSolutions Inc. (NYSE: EBS) today reported financial
results for the three and six months ended June 30, 2020 and
revised upward full year 2020 guidance.
“While we mobilize to meet the threat presented by COVID-19, we
are also successfully delivering on our long-term strategy,” said
Robert G. Kramer Sr., president and chief executive officer of
Emergent BioSolutions. “Our decades of experience in addressing
public health threats have prepared us to do both these things
well, ensuring that we are staying true to our mission to protect
and enhance life.”
FINANCIAL HIGHLIGHTS (unaudited)
(in millions) |
Q2 2020 |
Q2 2019 |
$ Change |
% Change |
Total Revenues |
$394.7 |
$243.2 |
$151.5 |
62.3% |
Net Income (Loss) |
$92.7 |
$(9.5) |
$102.2 |
* |
Adjusted Net Income (1) |
$105.7 |
$10.2 |
$95.5 |
* |
Adjusted EBITDA (1) |
$156.1 |
$29.4 |
$126.7 |
431.0% |
(in millions) |
YTD 2020 |
YTD 2019 |
$ Change |
% Change |
Total Revenues |
$587.2 |
$433.9 |
$153.3 |
35.3% |
Net Income (Loss) |
$80.2 |
$(35.6) |
$115.8 |
325.3% |
Adjusted Net Income (1) |
$106.0 |
$4.8 |
$101.2 |
* |
Adjusted EBITDA (1) |
$171.4 |
$37.6 |
$133.8 |
355.9% |
* % change is
greater than 500% |
Q2 2020 AND OTHER RECENT BUSINESS
ACCOMPLISHMENTS
- Awarded landmark public-private contract development and
manufacturing (CDMO) partnership task order by the U.S. Department
of Health and Human Services (HHS) under Operation Warp Speed
valued at approximately $628 million for production of leading
pharmaceutical and biotechnology innovators’ COVID-19 vaccine
candidates through 2021 and viral drug product capacity expansion
at the Company’s Rockville, Maryland facility
- Signed five-year large-scale drug substance manufacturing
agreement for Johnson & Johnson’s lead COVID-19 vaccine
candidate beginning in 2021, valued at approximately $480 million
for the first two years; follows initial agreement, valued at
approximately $135 million, to provide CDMO services and secure
large-scale manufacturing capacity
- Signed three-year large-scale drug substance manufacturing
agreement for AstraZeneca’s COVID-19 vaccine candidate, valued at
approximately $174 million through 2021; follows initial agreement,
valued at approximately $87 million, to provide CDMO services and
secure large-scale manufacturing capacity
- Awarded $34.6 million by the U.S. Department of Defense Joint
Program Executive Office and formed collaboration with Mount Sinai
Health System and ImmunoTek Bio Centers to advance the Company’s
COVID- Human Immune Globulin (COVID-HIG) therapeutic candidate for
potential post-exposure prophylaxis in populations at high risk of
COVID-19
- Announced contract option valued at $258 million exercised by
HHS to continue to procure AV7909 (Anthrax Vaccine Adsorbed,
Adjuvanted) for delivery into the U.S. Strategic National Stockpile
(SNS) over 12 months
- Announced contract option valued at $176 million exercised by
HHS to continue to procure ACAM2000® (Smallpox (Vaccinia) Vaccine,
Live) for delivery into the SNS over 12 months
- Executed contract option valued at $54 million exercised by HHS
to continue to procure VIGIV [Vaccinia Immune Globulin Intravenous
(Human)] for delivery into the SNS over 12 months
- Announced a $75 million CDMO investment in the Company’s
Canton, Massachusetts facility and drug substance expansion into
viral vector and gene therapy, expected to be available in Q2
2023
2020 FINANCIAL PERFORMANCE (unaudited)
(I) Quarter Ended June 30, 2020
(Q2)
Revenues
Total Revenues
For Q2 2020, total revenues were $394.7 million, an increase of
$151.5 million over 2019. Total revenues reflect an increase in
product sales and contract development and manufacturing services
revenues partially offset by a decrease in contracts and grants
revenues.
Product Sales
For Q2 2020, product sales were $298.5 million, an increase of
$115.0 million or 63% as compared to 2019. The change primarily
reflects increased sales of anthrax vaccines and ACAM2000 offset by
a decrease in Other, specifically sales of raxibacumab and travel
health vaccines.
(in
millions) |
Three Months Ended June 30, |
2020 |
2019 |
% Change |
Product Sales |
NARCAN Nasal Spray |
$72.8 |
$73.0 |
—% |
ACAM2000 |
$70.0 |
$6.5 |
NM |
Anthrax vaccines |
$132.3 |
$28.0 |
NM |
Other |
$23.4 |
$76.0 |
(69)% |
Total Product Sales |
$298.5 |
$183.5 |
63% |
Contract Development and Manufacturing Services
(CDMO)
For Q2 2020, revenue from the Company’s contract development and
manufacturing operations was $72.6 million, an increase of $53.9
million as compared to 2019. The increase is largely due to the
contribution of recently announced arrangements across development
services, drug substance, and drug product with industry and
government, most notably the Company's landmark public-private CDMO
partnership with BARDA in support of the U.S. government's
Operation Warp Speed Program.
Contracts and Grants
For Q2 2020, revenue from the Company’s development-based
contracts and grants was $23.6 million, a decrease of$17.4 million
as compared to 2019. The decrease primarily reflects the completion
of development activities associated with the AV7909 product
candidate in 2019, partially offset by recent new development
awards related to the COVID-HIG product candidate during the
current quarter.
Operating Expenses
Cost of Product Sales and Contract Development and
Manufacturing Services
For Q2 2020, cost of product sales and contract
development and manufacturing services was $129.8 million, an
increase of $29.0 million or 29% as compared to 2019. The increase
is primarily due to the increase in volume of product sales and
CDMO services and an increase in share-based compensation expense
due to a special broad-based, immediately vested equity award to
employees.
Research and Development (Gross and Net)
For Q2 2020, gross R&D expenses were $47.9 million, a
decrease of $16.0 million or 25% as compared to 2019. The decrease
primarily reflects a decline in costs associated with the Company’s
AV7909 product candidate and FLU-IGIV product candidate partially
offset by an increase in costs associated with the Company’s
chikungunya product candidate. During 2019, the Company completed
its development activities for AV7909.
For Q2 2020, 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 $24.3 million, a decrease of $1.4 million or 6% as
compared to 2019. The decrease is attributable to a decline in
costs associated with the Company’s FLU-IGIV product candidate
partially offset by an increase in costs associated with the
Company’s chikungunya product candidate. The Q2 2020 and Q2 2019
net R&D expense was 7% and 11%, respectively, of adjusted
revenue (total revenue less contracts & grants).
(in
millions) |
Three Months Ended June 30, |
2020 |
2019 |
% Change |
Research and Development Expenses |
$47.9 |
$63.9 |
(25)% |
Adjustments: |
Less Contracts and Grants Revenue |
$23.6 |
$41.0 |
(42)% |
Net Research and Development
Expenses |
$24.3 |
$22.9 |
6% |
Adjusted Revenue(Total Revenue
less Contracts and Grants Revenue) |
$371.1 |
$202.2 |
84% |
Net R&D as % of Adjusted
Revenue (Net R&D Margin) |
7% |
11% |
NA |
Selling, General and Administrative
For Q2 2020, selling, general and administrative
expenses were $76.0 million, an increase of $5.2 million or 7% as
compared to 2019. The increase primarily reflects an increase in
share-based compensation due to a special broad-based, immediately
vested equity award to employees as well as staffing costs to
support the Company's growth.
Amortization of Intangible Assets
For Q2 2020, amortization of intangible assets was $15.0
million, which was consistent with amortization of intangible
assets of $14.7 million in Q2 2019.
Income Taxes
For Q2 2020, the income tax provision in the amount of $28.0
million increased due to the Company being in a net income position
as compared to a net loss position during Q2 2019.
Net Income (Loss) & Adjusted Net Income
For Q2 2020, the Company recorded net income of $92.7 million,
or $1.73 per diluted share, versus a net loss of $9.5 million, or
$(0.18) per diluted share, in 2019.
For Q2 2020, the Company recorded adjusted net income of $105.7
million, or $1.98 per diluted share, versus an adjusted net income
of $10.2 million, or $0.20 per diluted share, in 2019. (1)
Adjusted EBITDA
For Q2 2020, the Company recorded adjusted EBITDA of $156.1
million versus $29.4 million in 2019. (1)
(II) Six months ended June 30, 2020
(unaudited)
Revenues
Total Revenues
For the six months ended June 30, 2020, total revenues were
$587.2 million, an increase of 35% over 2019. Total revenues
reflect an increase in product sales and contract development and
manufacturing services offset by a decline in contracts and
grants.
Product Sales
For the six months ended June 30, 2020, product sales were
$446.7 million, an increase of $110.2 million or 33% as compared to
2019. The increase primarily reflects sales of anthrax vaccines,
offset by decreased sales of raxibacumab and travel health vaccines
reflected in Other below.
(in
millions) |
Six Months Ended June 30, |
2020 |
2019 |
% Change |
Product Sales |
NARCAN Nasal Spray |
$145.0 |
$138.5 |
5% |
ACAM2000 |
$70.0 |
$52.0 |
35% |
Anthrax vaccines |
$184.2 |
$39.6 |
NM |
Other |
$47.5 |
$106.4 |
(55)% |
Total Product Sales |
$446.7 |
$336.5 |
33% |
Contract Development and Manufacturing Services
(CDMO)
For the six months ended June 30, 2020, revenue from the
Company’s contract development and manufacturing services
operations was $94.3 million, an increase of $59.7 million or 173%
as compared to 2019. The increase is largely due to the
contribution of recently announced arrangements across development
services, drug substance and drug product with industry and
government, specifically our landmark public-private CDMO
partnership with BARDA in support of the U.S. government's
Operation Warp Speed Program.
Contracts and Grants
For the six months ended June 30, 2020, revenue from the
Company’s development-based contracts and grants was $46.2 million,
a decrease of $16.6 million or 26% as compared to 2019. The
decrease primarily reflects the completion of development
activities associated with the AV7909 product candidate in 2019,
offset by recent new development awards related to the Company's
COVID-HIG product candidate.
Operating Expenses
Cost of Product Sales and Contract Development and
Manufacturing Services
For the six months ended June 30, 2020, cost of product sales
and contract development and manufacturing services was $206.7
million, an increase of $14.0 million or 7% as compared to 2019.
The increase is primarily due to the increase in volume of product
sales and CDMO services and an increase in share-based compensation
expense due to a special broad-based, immediately vested equity
award to employees.
Research and Development (Gross and Net)
For the six months ended June 30, 2020, gross R&D expenses
were $90.6 million, a decrease of $19.4 million compared to 2019.
The decrease primarily reflects a decline in costs associated with
the Company’s AV7909 product candidate and FLU-IGIV product
candidate as the Company was incurring costs associated with phase
2 clinical trials for FLU-IGIV partially offset by an increase in
costs associated with the Company’s chikungunya product
candidate.
For the six months ended June 30, 2020, 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 $44.4 million, a decrease of $2.8
million or 6% as compared to 2019. The decrease primarily reflects
a decline in costs associated with the FLU-IGIV product candidate
as the Company was incurring costs associated with phase 2 clinical
trials in 2019 partially offset by an increase in costs associated
with the Company’s chikungunya product candidate. The 2020 and 2019
net R&D expense was 8% and 13%, respectively, of adjusted
revenue (total revenue less contracts & grants).
(in
millions) |
Six Months Ended June 30, |
2020 |
2019 |
% Change |
Research and Development Expenses |
$90.6 |
$110.0 |
-18% |
Adjustments: |
Less Contracts and Grants Revenue |
$46.2 |
$62.8 |
(26)% |
Net Research and Development
Expenses |
$44.4 |
$47.2 |
(6)% |
Adjusted Revenue(Total Revenue
less Contracts and Grants Revenue) |
$541.0 |
$371.1 |
46% |
Net R&D as % of Adjusted
Revenue (Net R&D Margin) |
8% |
13% |
NA |
Selling, General and Administrative
For the six months ended June 30, 2020, selling, general and
administrative expenses were $145.7 million, an increase of $9.3
million or 7% as compared to 2019. The increase primarily reflects
an increase in share-based compensation due to a special
broad-based, immediately vested equity award to employees as well
as staffing costs to support the Company's growth.
Amortization of Intangible Assets
For the six months ended June 30, 2020, amortization of
intangible assets of $29.8 million was consistent with $29.2
million in 2019.
Income Taxes
For the six months ended June 30, 2020, the income tax provision
of $19.2 million increased due to the Company being in a net income
position as compared to a net loss position during the six months
ended June 30, 2019.
Net Income (Loss) & Adjusted Net Income
For the six months ended June 30, 2020, the Company recorded net
income of $80.2 million, or $1.51 per diluted share, versus a net
loss of $35.6 million, or $(0.69) per diluted share, in 2019.
For the six months ended June 30, 2020, the Company recorded
adjusted net income of $106.0 million, or $1.99 per diluted share,
versus adjusted net income of $4.8 million, or $0.09 per diluted
share, in 2019. (1)
Adjusted EBITDA
For the six months ended June 30, 2020, the Company recorded
adjusted EBITDA of $171.4 million versus $37.6 million in 2019.
(1)
2020 FINANCIAL FORECAST
Based upon the Company's financial performance year to date as
well as expectations for the remainder of the year, the Company has
revised its full year 2020 financial forecast reflected by the
following financial metrics and accompanying operational
considerations:
Financial Metrics
(in millions) |
REVISED 2020 FORECAST(As of 7/30/2020) |
previous 2020 forecast(As of 4/30/2020) |
Total Revenues |
$1,500 - $1,600 |
$1,175 -- $1,275 |
• NARCAN Nasal Spray |
$285 - $315 |
$285 - $315 |
•
Anthrax vaccines |
$320 - $350 |
$270 - $300 |
•
ACAM2000 |
$180 - $200 |
$180 - $200 |
•
Contract development and manufacturing services |
$440 - $460 |
$125 - $145 |
Adjusted Net Income (1) |
$340 - $390 |
$160 -- $210 |
Adjusted EBITDA (1) |
$535 - $600 |
$300 -- $360 |
Operational Considerations
- Year over year improvement in gross margin of 400 - 600 basis
points (previous range 200 - 400 basis points) driven by improved
product mix and increased contribution from our CDMO business;
- The delay into 2021 of the launch of the Phase 3 clinical study
for CHIKV-VLP, the Company’s chikungunya virus virus-like particle
vaccine, due to the timing of certain operational factors;
- The deferral into 2021 of a follow-on procurement contract with
the U.S. government for raxibacumab, the Company’s Food and Drug
Administration-approved anthrax monoclonal antibody therapeutic,
due to the impact of the prioritization of Operation Warp Speed on
the Company's technology transfer activities for the product;
- Continued challenges through the end of 2020 in the Company’s
travel health business and revenues associated with
Vaxchora®(Cholera Vaccine, Live, Oral) and Vivotif®(Typhoid Vaccine
Live Oral Ty21a)
- No generic competition in 2020 for NARCAN®(naloxone HCl) Nasal
Spray.
Emergent has assessed the risks to its business associated with
the COVID-19 pandemic and has adopted measures to mitigate those
risks as they are understood today and accordingly is providing
this outlook for 2020. Despite the lack of expected material
disruption to the company’s business, the management team continues
to assess the business and operational implications associated with
the pandemic and market conditions on its employees, patients and
customers.
The outlook for 2020 does not include estimates for potential
new corporate development or other M&A transactions.
Q3 2020 REVENUE FORECAST
For Q3 2020, the Company forecast for total revenues is $420
million - $450 million.
FOOTNOTES
(1) See “Reconciliation of Net Income (Loss) to Adjusted Net
Income and Adjusted EBITDA” for a definition of terms and the
reconciliation tables.
CONFERENCE CALL, PRESENTATION SUPPLEMENT, AND WEBCAST
INFORMATION
Company management will host a conference call at 5:00 pm
(Eastern Time) today, July 30, 2020, to discuss these financial
results. The conference call and presentation supplement can be
accessed from the Company's website or through the following:
Live Teleconference Information:Dial in: [US] (855) 766-6521;
[International] (262) 912-6157Conference ID: 7380905
Live Webcast Information:Visit
https://edge.media-server.com/mmc/p/bkkqx6kk 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 is a global life sciences company whose
mission is to protect and enhance life. Through our specialty
products and contract development and manufacturing services, we
are dedicated to providing solutions that address public health
threats. Through social responsibility, we aim to build healthier
and safer communities. We aspire to deliver peace of mind to our
patients and customers so they can focus on what’s most important
in their lives. In working together, we envision protecting or
enhancing 1 billion lives by 2030. For more informationvisit
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 related
projections and statements regarding our ability to meet such
projections in the anticipated timeframe, if at all; statements
regarding the success of our measures to mitigate the impact on our
business and operations of the novel strain of coronavirus
(SARS-CoV-2) causing COVID-19 disease; total contract value; annual
improvement in gross margin driven by improved product and services
mix and sales of certain key components of the product portfolio at
specified levels; the lack of generic competition for
NARCAN®(naloxone HCl) Nasal Spray for the remainder of 2020; our
ability to develop safe and effective treatments for COVID-19 and
obtain FDA approval or authorization for emergency or broader
patient use of such treatments; the entry into a follow-on
procurement contract for raxibacumab in 2021; the launch of the
Phase 3 clinical study for CHIKV-VLP; the impact on our revenues
from declines in sales of our vaccine products that target
travelers due to the reduction of international travel caused by
the COVID-19 pandemic 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, financial
and operation goals, strategic goals, growth strategy, product
sales, government development or procurement contracts or awards,
government appropriations, manufacturing capabilities, and the
timing of certain regulatory approvals or expenditures are
forward-looking statements. These forward-looking statements are
based on our current intentions, beliefs and expectations regarding
future events. We cannot guarantee that any forward-looking
statement will be accurate.
Investors should realize that if underlying assumptions prove
inaccurate or unknown risks or uncertainties materialize, actual
results could differ materially from our expectations. Investors
are, therefore, cautioned not to place undue reliance on any
forward-looking statement. Any forward-looking statements speak
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 our actual results to
differ materially from those indicated by such forward-looking
statements, including the impact of global economic conditions and
public health crises and epidemics, such as the impact from the
global pandemic that arose from the novel strain of coronavirus
(SARS-CoV-2) causing COVID-19 disease, on the markets, our
operations, and employees as well as those of our customers and
suppliers; availability of U.S. government funding for procurement
for our products; our ability to perform under our contracts with
the U.S. government, including the timing of and specifications
relating to deliveries; the continued exercise of discretion by
BARDA to procure additional doses of AV7909 (Anthrax Vaccine
Adsorbed, Adjuvanted) prior to approval by the FDA; our ability to
secure licensure of AV7909 from the FDA within the anticipated
timeframe, if at all; our ability to secure follow-on procurement
contracts for our solutions to public health threats that are under
procurement contracts that have expired or will be expiring; our
ability to successfully appeal the recent patent litigation
decision related to NARCAN®(naloxone hydrochloride) Nasal Spray
4mg/spray; our ability and the ability of our collaborators to
enforce patents related to NARCAN Nasal Spray against potential
generic entrants; our ability to identify and acquire companies,
businesses, products or product candidates that satisfy our
selection criteria; our ability and the ability of our contractors
and suppliers to maintain compliance with Current Good
Manufacturing Practices and other regulatory obligations; our
ability to comply with the operating and financial covenants
required by our senior secured credit facilities; our ability to
obtain and maintain regulatory approvals for our product candidates
and the timing of any such approvals; the safety and effectiveness
of the current COVID-19 product candidates we are working on; the
procurement of products by U.S. government entities under
regulatory exemptions prior to approval by the FDA and
corresponding procurement by government entities outside of the
United States under regulatory exemptions prior to approval by the
corresponding regulatory authorities in the applicable country; the
success of our commercialization, marketing and manufacturing
capabilities and strategy; and the accuracy of our estimates
regarding future revenues, expenses, and capital requirements and
needs for additional financing. 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
Contact |
Media
Contact |
Robert Burrows |
Miko B. Neri |
Vice President, Investor Relations |
Senior Director, Global Communications & Public
Affairs |
(o) 240/631-3280; (m) 240/413-1917 |
(o) 240/631-3392 |
burrowsr@ebsi.com |
nerim@ebsi.com |
Emergent BioSolutions Inc.Consolidated Statements
of Operations(unaudited, in millions, except per share data)
ASSETS |
|
June 30, 2020 |
|
|
December 31, 2019 |
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
$ |
268.8 |
|
$ |
167.8 |
|
Restricted cash |
|
0.2 |
|
|
0.2 |
|
Accounts receivable, net |
|
258.6 |
|
|
270.7 |
|
Inventories |
|
236.2 |
|
|
222.5 |
|
Prepaid expenses and other current assets |
|
32.1 |
|
|
25.0 |
|
Total current assets |
|
795.9 |
|
|
686.2 |
|
Property, plant and equipment, net |
|
580.1 |
|
|
542.3 |
|
Intangible assets, net |
|
693.2 |
|
|
712.9 |
|
In-process research and development |
|
29.0 |
|
|
29.0 |
|
Goodwill |
|
266.3 |
|
|
266.6 |
|
Other assets |
|
101.6 |
|
|
90.3 |
|
Total assets |
$ |
2,466.1 |
|
$ |
2,327.3 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable |
$ |
84.8 |
|
$ |
94.8 |
|
Accrued expenses |
|
33.8 |
|
|
39.5 |
|
Accrued compensation |
|
59.0 |
|
|
62.4 |
|
Debt, current portion |
|
29.1 |
|
|
12.9 |
|
Contract liabilities, current portion |
|
32.7 |
|
|
3.3 |
|
Contingent consideration, current portion |
|
22.3 |
|
|
3.2 |
|
Other current liabilities |
|
32.0 |
|
|
0.2 |
|
Total current liabilities |
|
293.7 |
|
|
216.3 |
|
Contingent consideration, net of current portion |
|
6.9 |
|
|
26.0 |
|
Debt, net of current portion |
|
758.1 |
|
|
798.4 |
|
Deferred tax liability |
|
63.9 |
|
|
63.9 |
|
Contract liabilities, net of current portion |
|
85.3 |
|
|
85.6 |
|
Other liabilities |
|
59.4 |
|
|
48.6 |
|
Total liabilities |
$ |
1,267.3 |
|
$ |
1,238.8 |
|
Stockholders' equity: |
|
|
|
|
|
|
Preferred stock, $0.001 par value; 15.0 shares authorized, no
shares issued oroutstanding |
|
— |
|
|
— |
|
Common stock, $0.001 par value;
200.0 shares authorized, 54.1 and 53.0 shares issued; 52.9 and 51.7
shares outstanding, respectively |
|
0.1 |
|
|
0.1 |
|
Treasury stock, at cost, 1.2
common shares |
|
(39.6 |
) |
|
(39.6 |
) |
Additional paid-in capital |
|
758.5 |
|
|
716.1 |
|
Accumulated other comprehensive
loss, net |
|
(22.2 |
) |
|
(9.9 |
) |
Retained earnings |
|
502.0 |
|
|
421.8 |
|
Total stockholders' equity |
|
1,198.8 |
|
|
1,088.5 |
|
Total liabilities and stockholders' equity |
$ |
2,466.1 |
|
$ |
2,327.3 |
|
Emergent BioSolutions Inc.Consolidated Statements
of Operations(unaudited, in millions, except per share data)
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|
2020 |
2019 |
2020 |
2019 |
Revenues: |
|
|
|
|
|
Product sales, net |
$ |
298.5 |
|
183.5 |
|
446.7 |
|
336.5 |
|
Contract development and manufacturing |
|
|
|
|
|
services |
72.6 |
|
18.7 |
|
94.3 |
|
34.6 |
|
Contracts and grants |
23.6 |
|
41.0 |
|
46.2 |
|
62.8 |
|
Total revenues |
394.7 |
|
243.2 |
|
587.2 |
|
433.9 |
|
Operating expenses: |
|
|
|
|
Cost of product sales and contract development and manufacturing
services |
129.8 |
|
100.8 |
|
206.7 |
|
192.7 |
|
Research and development |
47.9 |
|
63.9 |
|
90.6 |
|
110.0 |
|
Selling, general and administrative |
76.0 |
|
70.8 |
|
145.7 |
|
136.4 |
|
Amortization of intangible assets |
15.0 |
|
14.7 |
|
29.8 |
|
29.2 |
|
Total operating expenses |
268.7 |
|
250.2 |
|
472.8 |
|
468.3 |
|
Income (loss) from
operations |
126.0 |
|
(7.0 |
) |
114.4 |
|
(34.4 |
) |
Other income (expense): |
|
|
|
|
Interest expense |
(6.4 |
) |
(9.5 |
) |
(15.0 |
) |
(19.0 |
) |
Other, net |
1.1 |
|
1.4 |
|
0.0 |
|
0.4 |
|
Total other income (expense),
net |
(5.3 |
) |
(8.1 |
) |
(15.0 |
) |
(18.6 |
) |
Income (loss) before provision
for income |
|
|
|
|
|
|
|
taxes |
|
120.7 |
|
(15.1 |
) |
99.4 |
|
(53.0 |
) |
Income tax provision
(benefit) |
|
28.0 |
|
(5.6 |
) |
19.2 |
|
(17.4 |
) |
Net income (loss) |
$ |
92.7 |
|
(9.5 |
) |
80.2 |
|
(35.6 |
) |
Net income (loss) per common
share |
|
|
|
|
|
Basic |
$ |
1.76 |
|
(0.18 |
) |
1.53 |
|
(0.69 |
) |
Diluted |
$ |
1.73 |
|
(0.18 |
) |
1.51 |
|
(0.69 |
) |
Shares used in computing income (loss) per share |
|
|
|
|
Basic |
52.6 |
51.5 |
52.3 |
51.3 |
Diluted |
53.5 |
51.5 |
53.2 |
51.3 |
Emergent BioSolutions Inc.Condensed Consolidated
Statements of Cash Flows(unaudited, in millions)
|
|
|
Six Months Ended June 30, |
|
June 30, 2020 |
June 30, 2019 |
Cash flows provided by
operating activities: |
|
|
Net income (loss) |
$ |
80.2 |
|
$ |
(35.6 |
) |
Adjustments to reconcile net
income (loss) to net cash provided by operating activities: |
|
|
|
|
|
|
Stock-based compensation expense |
|
31.0 |
|
|
14.9 |
|
Depreciation and amortization |
|
56.8 |
|
|
55.1 |
|
Amortization of deferred financing costs |
|
1.5 |
|
|
1.5 |
|
Deferred income taxes |
|
(3.7 |
) |
|
(1.3 |
) |
Change in fair value of contingent consideration, net |
|
1.1 |
|
|
5.5 |
|
Other |
|
1.1 |
|
|
2.9 |
|
Changes in operating assets and
liabilities: |
|
|
Accounts receivable |
|
12.1 |
|
|
44.6 |
|
Inventories |
|
(13.7 |
) |
|
(26.1 |
) |
Prepaid expenses and other assets |
|
(16.9 |
) |
|
(44.9 |
) |
Accounts payable |
|
(14.5 |
) |
|
42.6 |
|
Accrued expenses |
|
25.0 |
|
|
6.9 |
|
Accrued compensation |
|
(3.4 |
) |
|
(13.5 |
) |
Contract liabilities |
|
29.1 |
|
|
16.4 |
|
Net cash provided by operating activities: |
|
185.7 |
|
|
69.0 |
|
Cash flows used in
investing activities: |
Purchases of property, plant and
equipment and other |
|
(59.3 |
) |
|
(35.5 |
) |
Milestone payment from prior
asset acquisition |
|
(10.0 |
) |
|
(10.0 |
) |
Net cash used in investing activities: |
|
(69.3 |
) |
|
(45.5 |
) |
Cash flows (used in)
provided by financing activities: |
Proceeds from revolving credit
facility |
|
— |
|
|
130.0 |
|
Principal payments on revolving
credit facility |
|
(20.0 |
) |
|
(80.0 |
) |
Principal payments on term loan
facility |
|
(5.6 |
) |
|
(5.6 |
) |
Proceeds from exercise of stock
options |
|
23.1 |
|
|
4.6 |
|
Taxes paid for share-based
compensation activity |
|
(11.7 |
) |
|
(6.3 |
) |
Contingent consideration
payments |
|
(1.1 |
) |
|
(1.0 |
) |
Net cash (used in) provided by financing activities: |
|
(15.3 |
) |
|
41.7 |
|
Effect of exchange rate changes
on cash, cash equivalents and restricted cash |
|
(0.1 |
) |
|
— |
|
Net increase in cash, cash
equivalents and restricted cash |
|
101.0 |
|
|
65.2 |
|
Cash, cash equivalents and
restricted cash at beginning of period |
|
168.0 |
|
|
112.4 |
|
Cash, cash equivalents and
restricted cash at end of period |
$ |
269.0 |
|
$ |
177.6 |
|
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED NET INCOME AND
ADJUSTED EBITDA (unaudited)
This press release contains two financial measures
(Adjusted Net Income and Adjusted EBITDA (Earnings Before
Depreciation and Amortization, Interest and Taxes)) 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
(loss) 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. All adjustments are tax
effected utilizing the federal statutory tax rate for the US,
except for changes in the fair value of contingent consideration as
the vast majority is non-deductible for tax purposes. Adjusted net
income (loss) margin is defined as adjusted net income (loss)
divided by total revenues. Adjusted EBITDA reflects net income
(loss) excluding the impact of depreciation, amortization, interest
expense and provision (benefit) for (from) income taxes, excluding
specified items that can be highly variable and the non-cash impact
of certain purchase accounting adjustments. Adjusted EBITDA margin
is defined as Adjusted EBITDA divided by total revenues. 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 June 30, |
2020 |
2019 |
Source |
Net income (loss) |
$92.7 |
($9.5) |
|
Adjustments: |
+ Acquisition-related costs (transaction & integration) |
— |
3.5 |
SG&A |
+ Non-cash amortization charges |
15.8 |
15.4 |
SG&A, Other Income |
+ Changes in fair value of contingent consideration |
0.5 |
3.9 |
SG&A |
+ Impact of purchase accounting on inventory step-up |
— |
1.1 |
COGS |
Tax effect |
(3.3) |
(4.2) |
|
Total adjustments: |
13.0 |
19.7 |
|
Adjusted net income |
$ 105.7 |
$ 10.2 |
|
Adjusted net income per diluted
share |
$1.98 |
$0.20 |
|
(in
millions, except per share value) |
Six Months Ended June 30, |
2020 |
2019 |
Source |
Net income (loss) |
$80.2 |
($35.6) |
|
Adjustments: |
+ Acquisition-related costs (transaction & integration) |
— |
7.4 |
SG&A |
+ Non-cash amortization charges |
31.3 |
30.7 |
SG&A,
Other Income |
+ Changes in fair value of contingent consideration |
1.1 |
5.5 |
COGS |
+ Impact of purchase accounting on inventory step-up |
— |
6.1 |
COGS |
Tax effect |
(6.6) |
(9.3) |
|
Total adjustments: |
25.8 |
40.4 |
|
Adjusted net income |
$106.0 |
$4.8 |
|
Adjusted net income per diluted
share |
$1.99 |
$0.09 |
|
(in
millions) |
REVISED 2020 Full Year Forecast |
2020F |
Source |
Net income |
$290 - $340 |
|
Adjustments: |
+ Non-cash amortization charges |
62 |
Intangible
Asset Amortization, Other Income |
+ Change in fair value of contingent consideration |
2 |
COGS |
Tax effect |
(14) |
|
Total adjustments: |
50 |
|
Adjusted net income |
$340 - $390 |
|
Reconciliation of Net Income (Loss) to Adjusted EBITDA
(Unaudited)
(in
millions) |
Three Months Ended June 30, |
2020 |
2019 |
Net income (loss) |
$92.7 |
($9.5) |
Adjustments: |
+ Depreciation & amortization |
28.6 |
27.2 |
+ Provision (benefit) for (from) income taxes |
28.0 |
(5.6) |
+ Total interest expense, net* |
6.3 |
8.8 |
+ Changes in fair value of contingent consideration |
0.5 |
3.9 |
+ Acquisition-related costs (transaction & integration) |
— |
3.5 |
+ Impact of purchase accounting on inventory step-up |
— |
1.1 |
Total adjustments |
63.4 |
38.9 |
Adjusted EBITDA |
$156.1 |
$29.4 |
* Includes interest
income of $0.1 million in 2020 and $0.6 million in 2019 |
(in
millions) |
Six Months Ended June 30, |
2020 |
2019 |
Net income (loss) |
$80.2 |
($35.6) |
Adjustments: |
+ Depreciation & amortization |
56.8 |
53.8 |
+ Provision (benefit) for (from) income taxes |
19.2 |
(17.4) |
+ Total interest expense, net* |
14.1 |
17.8 |
+ Changes in fair value of contingent consideration |
1.1 |
5.5 |
+ Acquisition-related costs (transaction & integration) |
— |
7.4 |
+ Impact of purchase accounting on inventory step-up |
— |
6.1 |
Total additional adjustments |
91.2 |
73.2 |
Adjusted EBITDA |
$171.4 |
$37.6 |
* Includes interest
income of $0.9 million in 2020 and $1.2 million in 2019 |
(in millions) |
REVISED 2020 Full Year Forecast |
2020F |
Net income |
$290 - $340 |
Adjustments: |
+ Depreciation & amortization |
115 |
+ Provision for income taxes |
98 to 113 |
+ Total interest expense |
30 |
+ Change in fair value of contingent consideration |
2 |
Total additional adjustments |
245 to 260 |
Adjusted EBITDA |
$535 - $600 |
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