Emergent BioSolutions Reports First Quarter 2015 Financial Results
Financial highlights for Q1 2015 include:
-
Total revenues of
$63.6 million , up 18% versus Q1 2014 -
Net loss of
$21.5 million , or$0.57 per diluted share; Adjusted net loss of$18.8 million , or$0.50 per diluted share -
EBITDA of
$(19.6) million , or$(0.52) per diluted share; Adjusted EBITDA of$(18.4) million , or$(0.48) per diluted share
2015 outlook:
-
FY 2015 total revenues of
$510-$540 million , net income of$50-$60 million (GAAP) and$60-$70 million (adjusted) -
Q2 2015 total revenues of
$105 to $120 million
"Overall, our business performance in 2015 has been strong with
(I) 2015 FINANCIAL PERFORMANCE -- Quarter Ended
Revenues
Product Sales
For Q1 2015, product sales were
| (in millions) | Three Months Ended | ||
| March 31, | |||
| 2015 | 2014 | % Change | |
| Product Sales | |||
| BioThrax® | $ -- | $24.5 | (100)% |
| Other biodefense | 11.9 | 8.1 | 47% |
| Total Biodefense | $11.9 | $32.6 | (63)% |
| Total Biosciences | 6.3 | 3.3 | 91% |
| Total Product Sales | $18.3 | $35.8 | (49)% |
Contract Manufacturing
For Q1 2015, revenues from our contract manufacturing operations were
Contracts, Grants and Collaborations
For Q1 2015, revenues from our contracts, grants and collaborations were
Operating Expenses
Cost of Product Sales and Contract Manufacturing
For Q1 2015, cost of product sales and contract manufacturing was
Research and Development (R&D)
For Q1 2015, gross R&D expenses were
Net R&D expenses, which are more representative of the company's actual out-of-pocket investment in product development, are calculated as gross research and development expenses less contracts, grants and collaboration revenues. For Q1 2015, net R&D expenses were
| (in millions) | Three Months Ended | ||
| March 31, | |||
| 2015 | 2014 | % Change | |
| Research and Development Expenses (Gross) | $38.7 | $30.3 | 28% |
| Adjustments: | |||
| Contracts, grants and collaborations revenues | 33.1 | 15.4 | 115% |
| Research and Development Expenses (Net) | $5.6 | $14.9 | (62)% |
Selling, General and Administrative
For Q1 2015, selling, general and administrative expenses were
Net Loss (GAAP and Adjusted)
For Q1 2015, GAAP net loss was
The following table provides a reconciliation of GAAP to Adjusted net loss for the three months ended
| (in millions, except per share price) | Three Months Ended | |||
| March 31, | ||||
| 2015 | 2014 | Source | ||
| GAAP Net Loss | $ (21.5) | $ (20.2) | NA | |
| Adjustments: | ||||
| Acquisition-related costs (transaction & integration) | 1.1 | 4.2 | SG&A | |
| Non-cash amortization charges | 2.6 | 1.6 | COGS, SG&A, Other Income | |
| Write off of syndicated loan fees | -- | 1.8 | Other Income | |
| Impact of purchase accounting on inventory step-up | 0.1 | 0.4 | COGS | |
| Tax effect | (1.1) | (2.4) | NA | |
| Total Adjustments | 2.7 | 5.6 | NA | |
| Adjusted Net Loss | $ (18.8) | $ (14.6) | NA | |
| Adjusted Net Loss Per Diluted Share | $ (0.50) | $ (0.40) | NA | |
EBITDA and Adjusted EBITDA
For Q1 2015, earnings before interest, taxes, depreciation and amortization, or EBITDA, was
The following table provides a reconciliation of GAAP Net Loss to EBITDA and Adjusted EBITDA for the three months ended
| (in millions, except per share price) | Three Months Ended | |
| March 31 | ||
| 2015 | 2014 | |
| GAAP Net Loss | $ (21.5) | $ (20.2) |
| Adjustments: | ||
| + Depreciation & Amortization | 8.5 | 6.8 |
| - Benefit From Income Taxes | (8.3) | (8.2) |
| + Interest Expense | 1.7 | 3.5 |
| Total Adjustments | 1.9 | 2.1 |
| EBITDA | $ (19.6) | $ (18.1) |
| EBITDA Per Diluted Share | $ (0.52) | $ (0.49) |
| Additional Adjustments: | ||
| + Acquisition-related costs (transaction & integration) | 1.1 | 4.2 |
| + Impact of purchase accounting on inventory step-up | 0.1 | 0.4 |
| Total Additional Adjustments | 1.2 | 4.6 |
| Adjusted EBITDA | $ (18.4) | $ (13.5) |
| Adjusted EBITDA Per Diluted Share | $ (0.48) | $ (0.37) |
Financial Condition and Liquidity
Cash and cash equivalents at
(II) 2015 FINANCIAL OUTLOOK
Full Year 2015
Factoring in the financial performance through the three months ended
| (in millions) | Twelve Months Ended |
| December 31, 2015 | |
| (Forecast) | |
| Total Revenues | $510 to $540 |
| -- BioThrax Product Sales | $270 to $285 |
| Net Income (GAAP) | $50 to $60 |
| Net Income (Adjusted) | $60 to $70 |
The company's outlook for 2015 does not include any estimates for potential new corporate development or other M&A transactions.
The following table provides a reconciliation of GAAP Net Income to Adjusted Net Income for the forecasted twelve month period of 2015.
| (in millions) | Financial Results for the | |
| Year Ended December 31, | ||
| 2015 | Source | |
| (Forecast) | ||
| GAAP Net Income | $50.0 to $60.0 | NA |
| Adjustments: | ||
| Acquisition-related costs (transaction & integration) | 2.0 | SG&A |
| Non-cash amortization charges | 11.0 | COGS, SG&A, Other Income |
| Impact of purchase accounting on inventory step-up | 1.0 | COGS |
| Restructuring and other | 1.0 | SG&A |
| Tax effect | (5.0) | NA |
| Total Adjustments | 10.0 | NA |
| Adjusted Net Income | $60.0 to $70.0 | NA |
Q2 2015
For the second quarter of 2015, the company anticipates total revenues of
(III) RECONCILIATION OF GAAP NET INCOME TO ADJUSTED NET INCOME, GAAP NET LOSS TO ADJUSTED NET LOSS, EBITDA AND ADJUSTED EBITDA
This press release contains four financial measures (Adjusted Net Income, Adjusted Net Loss, EBITDA or earnings before interest, taxes, depreciation and amortization, and adjusted EBITDA) that are considered "non-GAAP" financial measures under applicable
The determination of the amounts that are excluded from these non-GAAP financial measures are a matter of management judgment and depend upon, among other factors, the nature of the underlying expense or income amounts. Because non-GAAP financial measures exclude the effect of items that will increase or decrease the company's reported results of operations, management strongly encourages investors to review the company's consolidated financial statements and publicly filed reports in their entirety.
CONFERENCE CALL AND WEBCAST INFORMATION
Company management will host a conference call at
| Live Teleconference Information: | Live Webcast Information: |
| Dial in number: 855-766-6521 | Visit www.emergentbiosolutions.com |
| International dial in: 262-912-6157 | and select the "Investors" section |
| Passcode: 27616485 | |
| Webcast Archive: | |
| Visit www.emergentbiosolutions.com | |
| and select the "Investors" section | |
| Available through May 7, 2016 |
ABOUT
SAFE HARBOR STATEMENT
This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements, other than statements of historical fact, including our financial guidance, and any other statements containing the words "believes", "expects", "anticipates", "intends", "plans", "forecasts", "estimates" and similar expressions in conjunction with, among other things, discussions of financial performance or financial condition, growth strategy, product sales, manufacturing capabilities, product development, regulatory approvals or expenditures are forward-looking statements. These forward-looking statements are based on our current intentions, beliefs and expectations regarding future events. We cannot guarantee that any forward-looking statement will be accurate. Investors should realize that if underlying assumptions prove inaccurate or unknown risks or uncertainties materialize, actual results could differ materially from our expectations. Investors are, therefore, cautioned not to place undue reliance on any forward-looking statement. Any forward-looking statement speaks only as of the date of this press release, and, except as required by law, we do not undertake to update any forward-looking statement to reflect new information, events or circumstances.
There are a number of important factors that could cause the company's actual results to differ materially from those indicated by such forward-looking statements, including appropriations for BioThrax procurement; our ability to perform under our contracts with the U.S. government related to BioThrax, including the timing of deliveries; our ability to obtain new BioThrax sales contracts or modifications to existing contracts; the availability of funding for our U.S. government grants and contracts; our ability to successfully execute our growth strategy and achieve our financial and operational goals; our ability to successfully integrate and develop the products or product candidates, programs, operations and personnel of any entities or businesses that we acquire; our ability to perform under our contract with the U.S. government to develop and obtain regulatory approval for large-scale manufacturing of BioThrax in Building 55, our large-scale vaccine manufacturing facility in
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
FINANCIAL STATEMENTS FOLLOW
| Emergent BioSolutions Inc. and Subsidiaries | ||
| Consolidated Balance Sheets | ||
| (in thousands, except share and per share data) | ||
| March 31, 2015 | December 31, 2014 | |
| ASSETS | (Unaudited) | |
| Current assets: | ||
| Cash and cash equivalents | $ 216,515 | $ 280,499 |
| Accounts receivable | 64,059 | 58,834 |
| Inventories | 82,134 | 65,674 |
| Deferred taxes, current portion, net | 1,656 | 1,710 |
| Income tax receivable, net | 17,023 | 1,357 |
| Prepaid expenses and other current assets | 24,424 | 24,101 |
| Total current assets | 405,811 | 432,175 |
| Property, plant and equipment, net | 315,489 | 313,979 |
| In-process research and development | 77,800 | 77,800 |
| Intangible assets, net | 56,202 | 58,344 |
| Goodwill | 41,984 | 41,984 |
| Deferred tax assets, long-term, net | 12,863 | 12,764 |
| Other assets | 7,696 | 8,216 |
| Total assets | $ 917,845 | $ 945,262 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Current liabilities: | ||
| Accounts payable | $ 40,583 | $ 40,930 |
| Accrued expenses and other current liabilities | 4,606 | 6,274 |
| Accrued compensation | 20,818 | 31,654 |
| Contingent consideration, current portion | 6,860 | 6,487 |
| Provisions for chargebacks | 2,164 | 2,246 |
| Deferred revenue, current portion | 5,266 | 5,345 |
| Total current liabilities | 80,297 | 92,936 |
| Contingent consideration, net of current portion | 41,594 | 41,170 |
| Long-term indebtedness | 251,000 | 251,000 |
| Deferred revenue, net of current portion | 5,806 | 5,713 |
| Other liabilities | 1,270 | 1,242 |
| Total liabilities | 379,967 | 392,061 |
| Commitments and contingencies | ||
| Stockholders' equity: | ||
| Preferred stock, $0.001 par value; 15,000,000 shares authorized, 0 shares issued and outstanding at March 31, 2015 and December 31, 2014, respectively | -- | -- |
| Common stock, $0.001 par value; 100,000,000 shares authorized, 38,745,536 shares issued and 38,325,347 shares outstanding at March 31, 2015; 38,129,872 shares issued and 37,709,683 shares outstanding at December 31, 2014 | 38 | 38 |
| Treasury stock, at cost, 420,189 common shares for both March 31, 2015 and December 31, 2014 | (6,320) | (6,320) |
| Additional paid-in capital | 280,653 | 274,222 |
| Accumulated other comprehensive loss | (3,242) | (3,008) |
| Retained earnings | 266,749 | 288,269 |
| Total stockholders' equity | 537,878 | 553,201 |
| Total liabilities and stockholders' equity | $ 917,845 | $ 945,262 |
| Emergent BioSolutions Inc. and Subsidiaries | ||
| Consolidated Statements of Operations | ||
| (in thousands, except share and per share data) | ||
| Three Months Ended March 31, | ||
| 2015 | 2014 | |
| (Unaudited) | ||
| Revenues: | ||
| Product sales | $ 18,291 | $ 35,767 |
| Contract manufacturing | 12,243 | 2,726 |
| Contracts, grants and collaborations | 33,099 | 15,391 |
| Total revenues | 63,633 | 53,884 |
| Operating expense: | ||
| Cost of product sales and contract manufacturing | 18,748 | 18,997 |
| Research and development | 38,702 | 30,256 |
| Selling, general and administrative | 34,493 | 30,089 |
| Loss from operations | (28,310) | (25,458) |
| Other income (expense): | ||
| Interest income | 82 | 40 |
| Interest expense | (1,661) | (3,535) |
| Other income (expense), net | 100 | 512 |
| Total other income (expense) | (1,479) | (2,983) |
| Loss before benefit from income taxes | (29,789) | (28,441) |
| Benefit from income taxes | (8,269) | (8,205) |
| Net loss | $ (21,520) | $ (20,236) |
| Loss per share - basic | $ (0.57) | $ (0.55) |
| Loss per share - diluted | $ (0.57) | $ (0.55) |
| Weighted-average number of shares - basic | 37,949,358 | 36,854,370 |
| Weighted-average number of shares - diluted | 37,949,358 | 36,854,370 |
| Emergent BioSolutions Inc. and Subsidiaries | ||
| Consolidated Statements of Cash Flows | ||
| (in thousands) | ||
| Three Months Ended March 31, | ||
| 2015 | 2014 | |
| Cash flows from operating activities: | (Unaudited) | |
| Net loss | $ (21,520) | $ (20,236) |
| Adjustments to reconcile to net cash used in operating activities: | ||
| Stock-based compensation expense | 3,798 | 2,650 |
| Depreciation and amortization | 8,532 | 6,835 |
| Current and deferred incomes taxes | (7,261) | (8,052) |
| Change in fair value of contingent consideration | 1,559 | 412 |
| Write off of debt issuance costs | -- | 1,831 |
| Excess tax benefits from stock-based compensation | (5,414) | (4,570) |
| Other | 17 | 453 |
| Changes in operating assets and liabilities: | ||
| Accounts receivable | (5,225) | 17,590 |
| Inventories | (16,460) | (4,006) |
| Income taxes | (12,160) | (3,753) |
| Prepaid expenses and other assets | (249) | 556 |
| Accounts payable | 1,102 | (10,713) |
| Accrued expenses and other liabilities | (1,641) | 1,546 |
| Accrued compensation | (10,883) | (8,720) |
| Provision for chargebacks | (82) | 159 |
| Deferred revenue | 14 | (1,227) |
| Net cash used in operating activities | (65,873) | (29,245) |
| Cash flows from investing activities: | ||
| Purchases of property, plant and equipment | (9,082) | (4,590) |
| Acquisition of Cangene Corporation, net of acquired cash | -- | (178,167) |
| Net cash used in investing activities | (9,082) | (182,757) |
| Cash flows from financing activities: | ||
| Proceeds from convertible debenture, net of bank fees | -- | 241,654 |
| Proceeds from long-term debt obligations | -- | 1,000 |
| Issuance of common stock upon exercise of stock options | 6,344 | 8,137 |
| Excess tax benefits from stock-based compensation | 5,414 | 4,570 |
| Principal payments on long-term indebtedness | -- | (62,000) |
| Contingent obligation payments | (762) | (487) |
| Net cash provided by financing activities | 10,996 | 192,874 |
| Effect of exchange rate changes on cash and cash equivalents | (25) | 5 |
| Net decrease in cash and cash equivalents | (63,984) | (19,123) |
| Cash and cash equivalents at beginning of period | 280,499 | 179,338 |
| Cash and cash equivalents at end of period | $ 216,515 | $ 160,215 |
CONTACT: Investor Contact
Robert G. Burrows
Vice President, Investor Relations
301-795-1877
BurrowsR@ebsi.com
Media Contact:
Tracey Schmitt
Vice President, Global Public Affairs
and Corporate Responsibility
301-795-1800
SchmittT@ebsi.com
