Emergent BioSolutions Inc. (NYSE: EBS) today reported financial
results for the second quarter ended June 30, 2021.
“Our second quarter performance demonstrates the
strength of our strategy and diversified business model,” said
Robert G. Kramer, president and chief executive officer of Emergent
BioSolutions. “Through continued investment and innovation, we will
play an important role in helping deliver solutions to the public
health threats we face. We are proud to be resuming production of
COVID-19 vaccine batches following additional reviews and
collaboration with the Food and Drug Administration and our
manufacturing partner."
Kramer added, “I am thankful for the relentless
determination of our Emergent team across the globe to deliver for
our patients, customers and partners.”
FINANCIAL HIGHLIGHTS (1)
($ in millions, except per share amounts) |
Q2 2021 |
Q2 2020 |
% Change |
Total revenues |
$397.5 |
$394.7 |
1% |
Net income |
$4.6 |
$92.7 |
(95)% |
Net income per diluted share |
$0.09 |
$1.73 |
(95)% |
Adjusted net income (2) |
$18.0 |
$105.7 |
(83)% |
Adjusted net income (2) per diluted share |
$0.33 |
$1.98 |
(83)% |
Adjusted EBITDA (2) |
$49.5 |
$156.1 |
(68)% |
($ in millions, except per share amounts) |
YTD 2021 |
YTD 2020 |
% Change |
Total revenues |
$740.5 |
$587.2 |
26% |
Net income |
$74.3 |
$80.2 |
(7)% |
Net income per diluted share |
$1.37 |
$1.51 |
(9)% |
Adjusted net income (2) |
$101.6 |
$106.0 |
(4)% |
Adjusted net income (2) per diluted share |
$1.87 |
$1.99 |
(6)% |
Adjusted EBITDA (2) |
$173.0 |
$171.4 |
1% |
Q2 2021 AND OTHER RECENT BUSINESS
ACCOMPLISHMENTS
- Announced that the U.S. Food and Drug
Administration (FDA) has informed the Company that it can resume
production of Johnson & Johnson’s COVID-19 vaccine bulk drug
substance at the Company's Bayview manufacturing facility.
- Supporting the U.S. government's
smallpox preparedness efforts under contract options exercised by
the Department of Health and Human Services (HHS) valued at
approximately $182 million and $56 million to deliver ACAM2000®
(Smallpox (Vaccinia) Vaccine, Live) and VIGIV [Vaccinia Immune
Globulin Intravenous (Human)] (VIGIV), respectively.
- Supporting the Canadian government’s
anthrax preparedness efforts under a new contract with the Public
Health Agency Canada (PHAC) to deliver Anthrasil® (Anthrax Immune
Globulin Intravenous [human]) through March 2023.
- Received approval from the Federal
Agency for Medicines and Health Products (FAMHP) of Belgium for
Trobigard® Auto-injector (atropine sulfate 2mg/obidoxime chloride
220mg; solution for injection), an emergency treatment product for
known or suspected exposure to nerve agents or toxic
organophosphates in adults over 18 years of age.
2021 FINANCIAL PERFORMANCE (1)
(I) Quarter Ended June 30, 2021
(Q2)
Revenues
($ in millions) |
Q2 2021 |
Q2 2020 |
% Change |
Product sales, net (3): |
|
$106.2 |
$72.8 |
46% |
|
$51.5 |
$132.3 |
(61)% |
|
$— |
$70.0 |
(100)% |
|
$23.5 |
$23.4 |
—% |
Total product sales, net |
$181.2 |
$298.5 |
(39)% |
Contract development and manufacturing (CDMO) services |
$190.9 |
$72.6 |
* |
Contracts and grants |
$25.4 |
$23.6 |
8% |
Total revenues |
$397.5 |
$394.7 |
1% |
* % change is greater than 100% |
Product Sales, net NARCAN Nasal
SprayFor Q2 2021, revenues from NARCAN® (naloxone HCI) Nasal Spray
increased $33.4 million as compared to Q2 2020. The increase is
largely driven by a growth in sales to the U.S. public interest and
commercial retail markets as well as an increase in sales to
customer channels in Canada.
Anthrax vaccinesFor Q2 2021, revenues from
Anthrax vaccines decreased $80.8 million as compared to Q2 2020.
The decrease is largely driven by timing of deliveries to the U.S.
government.
ACAM2000For Q2 2021, revenues from ACAM2000
decreased $70.0 million as compared to Q2 2020. The decrease is
largely driven by the timing of deliveries to the U.S. government;
the most recent option exercise was received in July 2021 valued at
approximately $182 million, the entire amount of which is expected
to be delivered in fiscal year 2021.
Other (4)For Q2 2021, revenues from other
product sales were consistent as compared to Q2 2020.
Contract Development and Manufacturing
(CDMO) Services For Q2 2021, revenue from contract
development and manufacturing services increased $118.3 million, as
compared to Q2 2020. The increase is due to the public-private
partnership with the Biomedical Advanced Research and Development
Authority (BARDA) and arrangements with pharma/biotech innovators
to address the COVID-19 pandemic. These arrangements were entered
into during the second and third quarters of 2020.
Contracts and GrantsFor Q2
2021, revenues from contracts and grants were consistent as
compared to Q2 2020.
Operating Expenses
($ in millions) |
Q2 2021 |
Q2 2020 |
% Change |
Cost of product sales and CDMO services |
$227.8 |
$129.8 |
76% |
Research and development |
$48.9 |
$47.9 |
2% |
Selling, general and administrative |
$91.2 |
$76.0 |
20% |
Amortization of intangible assets |
$15.1 |
$15.0 |
1% |
Cost of Product Sales and CDMO
ServicesFor Q2 2021, cost of product sales and contract
development and manufacturing services increased $98.0 million as
compared to Q2 2020. The increase primarily consists of an increase
in costs associated with the Company's contract development and
manufacturing services due to higher volume of CDMO services, a
majority of which were in support of the Company's arrangements to
address the COVID-19 pandemic. Additionally, during the quarter the
Company had inventory write-offs of $41.5 million associated with
raw materials and in-process batches manufactured at the Company's
Bayview facility that it plans to discard as they were deemed
unusable. These increases were partially offset by decreases in the
cost of product sales due to less volume.
Research and Development For Q2
2021, research and development expenses were consistent as compared
to Q2 2020.
Selling, General and
AdministrativeFor Q2 2021, selling, general and
administrative expenses increased $15.2 million as compared to Q2
2020. The increase is primarily due to an increase in costs related
to defending and supporting the Company's corporate reputation.
Additional Financial
InformationGross Margin (2)
($ in millions) |
Q2 2021 |
Q2 2020 |
% Change |
Gross margin |
$144.3 |
$241.3 |
(40)% |
Gross margin % (gross margin divided by adjusted revenues (2)) |
39% |
65% |
(26)% |
For Q2 2021, gross margin decreased $97.0
million as compared to Q2 2020. The decrease is primarily due to
the increase in the cost of product sales and CDMO services,
specifically $41.5 million associated with the inventory
write-offs, $43.1 million associated with product and service
revenue mix which was weighted more heavily to lower margin
products and services, and $12.4 million associated with costs
incurred to remediate and strengthen manufacturing processes at the
Company's Bayview facility, many of which are considered temporary
in nature.
CDMO Metrics
CDMO Backlog Rollforward |
($ in millions) |
Beginning backlog (3/31/2021) (5) |
$1,342.8 |
Revenue recognized during Q2 2021 |
($190.9) |
New Business - Initial value of contracts secured during Q2 2021
(6) |
$53.2 |
New Business - Incremental value of existing contracts modified
during Q2 2021 (6) |
($108.1) |
Ending backlog (6/30/2021) (5) |
$1,097.0 |
($ in millions) |
June 30, 2021 |
March 31, 2021 |
% Change |
CDMO services backlog (5) |
$1,097.0 |
$1,342.8 |
(18)% |
CDMO services opportunity funnel (7) |
$672.0 |
$807.1 |
(17)% |
For Q2 2021, CDMO services backlog decreased
$245.8 million as compared to Q1 2021. The decrease is primarily
due to revenue realized in the quarter of $190.9 million, $108.1
million of negative contract modifications and other adjustments
offset by $53.2 million of positive new business generation during
the quarter.
For Q2 2021, CDMO services opportunity funnel
decreased $135.1 million as compared to Q1 2021. The decrease is
primarily due to the exclusion of opportunities at the Company's
Bayview facility as all manufacturing activities at that facility
are currently prioritized to support the Johnson & Johnson
COVID-19 vaccine.
Capital Expenditures
($ in millions) |
Q2 2021 |
Q2 2020 |
% Change |
Gross capital expenditures |
$67.0 |
$35.1 |
91% |
- Capital expenditures reimbursed |
$11.4 |
$— |
—% |
Net capital expenditures |
$55.6 |
$35.1 |
58% |
Gross capital expenditures as a % of total revenues |
17% |
9% |
8% |
Net capital expenditures as a % of total revenues |
14% |
9% |
5% |
For Q2 2021, capital expenditures increased
largely due to the Company's continued investments associated with
increased capacity and capabilities at the Company's Rockville and
Bayview facilities. The increase in gross capital expenditures was
offset by reimbursements of $11.4 million related to arrangements
funded by the U.S. government.
2021 FINANCIAL FORECAST
For full year 2021, the Company's forecast includes
the following financial metrics:
($ in millions) |
2021 Forecast |
Total revenues |
$1,700 - $1,900 |
Reaffirmed |
|
$305 - $325 |
Reaffirmed |
|
$280 - $310 |
Reaffirmed |
|
$185 - $205 |
Reaffirmed |
|
$765 - $875 |
Reaffirmed |
Adjusted EBITDA (2) |
$620 - $720 |
Reaffirmed |
Adjusted net income (2) |
$395 - $470 |
Reaffirmed |
Gross margin (2) |
61% - 63% |
Revised** |
** Previous forecasted gross margin was 63% to 65%. |
The Company's financial forecast for 2021 includes
the following additional considerations:
Revised Considerations
- Gross margin reflects the impact of
the Q2 2021 performance as well as expectations for the remainder
of the year.
Unchanged Considerations
- Narcan® Nasal Spray revenues assume
the naloxone market remains competitive and incorporates the impact
of at least one new branded entrant into the market by year end, as
well as that no generic entrant will enter the market prior to the
anticipated appellate decision related to the pending patent
litigation, which is expected in the second half of 2021.
- Anthrax vaccines revenues are expected
to continue to primarily reflect procurement of AV7909 (Anthrax
Vaccine Adsorbed, Adjuvanted) under the terms of the Company’s
existing contract with BARDA at a more normalized annual
level.
- ACAM2000®, (Smallpox (Vaccinia)
Vaccine, Live) vaccine revenues incorporate the expected full
delivery of product under the $182 million option exercise received
in July 2021 as well as other international sales.
- CDMO services revenue reflects the
successful manufacturing of Johnson & Johnson's COVID-19
vaccine bulk drug substance. On July 29, the Company announced that
it was informed by the FDA that it can resume production at its
Bayview manufacturing facility.
- Total revenues, specifically other
product sales, are expected to be impacted due to the Company's
assumption that a new raxibacumab contract will be awarded later
than previously planned.
- R&D expenses are expected to
reflect continued pipeline progress across the vaccines,
therapeutics, and devices portfolios, including the assumption of
at least one Phase 3 launch and one Biologics License Application
(BLA)/Emergency Use Authorization (EUA) filing.
- Capital expenditures, net of
reimbursement, are expected to be in a range of 8% to 9% of total
revenues, reflecting ongoing investments in capacity and capability
expansions in support of the Company's CDMO services business and
product portfolio.
Q3 2021 REVENUE FORECAST
For Q3 2021, the Company expects total revenues of
$400 million to $500 million.
FOOTNOTES
(1) All financial information incorporated
within this release is unaudited. (2) See
"Reconciliation of Net Income to Adjusted Net Income,"
"Reconciliation of Net Income to Adjusted EBITDA," "Reconciliation
of Gross Margin" and "Reconciliation of Net Research and
Development Expenses" for a definition of terms and the
reconciliation tables.(3) Product sales, net are reported net of
variable consideration including returns, rebates, wholesaler fees
and prompt pay discounts. (4) Other can include a combination of
sales of any of the following products: BAT, VIGIV, Anthrasil,
raxibacumab, RSDL, Trobigard, Vivotif, and Vaxchora.(5) CDMO
backlog is defined as estimated remaining contract value as of the
indicated period pursuant to signed contracts, the majority of
which is expected to be recognized over the next 24 months.(6) CDMO
new business is defined as initial value of contracts secured as
well as incremental value of existing contracts modified within the
indicated period and is incorporated into Backlog.(7) CDMO
opportunity funnel is defined as proposal values from new work with
new customers, new work with existing customers and
extensions/expansions of existing contracts with existing customers
that, if converted to new business, the majority of which is
expected to be realized over the next 24 months. This excludes any
value associated with an extension of the commercial supply
agreement (CSA) with Johnson & Johnson.
CONFERENCE CALL, PRESENTATION SUPPLEMENT
AND WEBCAST INFORMATION
Company management will host a conference call
at 5:00 pm (Eastern Time) today, July 29, 2021, 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: 1089625 |
|
Live Webcast Information:Visit
https://edge.media-server.com/mmc/p/yzfzc7j7 for the
webcast. |
|
A replay of the call can be accessed from the
Emergent website.
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
information, visit our website and follow us on LinkedIn, Twitter,
and Instagram.
RECONCILIATION OF NON-GAAP
MEASURES
This press release contains financial measures
(Adjusted Net Income, Adjusted EBITDA (Earnings Before
Depreciation and Amortization, Interest and Taxes), Gross Margin,
Adjusted Revenues and Net Research and Development
expenses) 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.
For its non-GAAP measures, the Company adjusts for specified items
that can be highly variable or difficult to predict, or reflect the
non-cash impact of charges or accounting changes. As needed, such
adjustments are tax effected utilizing the federal statutory tax
rate for the U.S., except for changes in the fair value of
contingent consideration as the vast majority is non-deductible for
tax purposes. 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. For more
information on these non-GAAP financial measures, please see the
tables captioned "Reconciliation of Net Income to Adjusted Net
Income," "Reconciliation of Net Income to Adjusted EBITDA,"
"Reconciliation of Gross Margin" and "Reconciliation of Net
Research and Development Expenses" included at the end of this
release.
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.
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 strength of our strategy and
diversified business model; annual expectations underlying gross
margin; continued procurement of AV7909 under our existing contract
with BARDA; the full delivery in 2021 of vaccines procured under
the July 2021 ACAM2000® option exercise; the potential award of a
new procurement contract for raxibacumab; the strength of the
naloxone market and the timing and number of naloxone competitor
entrants expected by year end; the timing of the anticipated
appellate decision on related pending patent litigation; progress
across the vaccines, therapeutics, and devices portfolios and
anticipated timing and number of regulatory submissions; capacity
expansion in our CDMO business portfolio; timing of CDMO revenues;
our CDMO backlog and opportunity funnel; capital expenditures and
total contract value; 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, product sales, government development or
procurement contracts or awards, government appropriations,
manufacturing capabilities, and the timing of certain clinical
trials and regulatory approvals 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.
The reader should realize that if underlying
assumptions prove inaccurate or unknown risks or uncertainties
materialize, actual results could differ materially from our
expectations. Readers 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 continued
exercise of discretion by BARDA to procure additional doses of
AV7909 prior to approval by the FDA; our ability to negotiate
follow-on procurement contracts for AV7909 and other follow-on
procurement contracts for our public health threat products that
have expired or will be expiring; the impact on our revenues from
the hold of certain COVID-19 vaccine bulk drug substance lots; our
ability to meet our commitments to continued quality and
manufacturing compliance at our Baltimore Bayview facility and the
potential impact on our ability to continue production of bulk drug
substance for Johnson & Johnson’s COVID-19 vaccine at the
facility; the availability of U.S. government funding for
procurement of our products and certain product candidates; our
ability to perform under our contracts with the U.S. government
including the timing of and specifications relating to deliveries;
our ability to provide CDMO services for the development and/or
manufacture of product candidates of our customers at required
levels and on required timelines; 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 obtain and maintain regulatory approvals for our product
candidates and the timing of any such approvals; changes to U.S.
government priorities for the SNS and the future exercise of all
remaining options under our contract for the procurement of
ACAM2000® and other government procurement contracts; the
negotiation of further commitments or contracts related to the
collaboration and deployment of capacity toward future commercial
manufacturing under our CDMO contracts; the timing of our
submission of an application for and our ability to secure
licensure of AV7909 from the FDA within the anticipated timeframe,
if at all; our ability to successfully appeal the patent litigation
decision related to NARCAN® Nasal Spray 4mg/spray, and the impact
of competition from potential generic and branded naloxone entrants
on NARCAN® Nasal Spray; the results of pending shareholder
litigation and the potential impact on our business; our ability to
develop a safe and effective treatment for COVID-19 and obtain
authorization for emergency use for or approval of such treatment
from the FDA; our ability to identify and acquire companies,
businesses, products or product candidates that satisfy our
selection criteria; our ability to comply with the operating and
financial covenants required by our senior secured credit
facilities and our 3.875% Senior Unsecured Notes due 2028; 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
full impact of COVID-19 disease on our markets, operations and
employees as well as those of our customers and suppliers; the
impact on our revenues from short-term declines in sales of our
vaccine products that target travelers due to the reduction of
international travel caused by the COVID-19 pandemic; the success
of our commercialization, marketing and manufacturing capabilities
and strategy; and the accuracy of our estimates regarding future
revenues, expenses, 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. The reader 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 Relationsburrowsr@ebsi.com (240) 413-1917 |
Media ContactMatt HartwigDirector, Media
Relationsmediarelations@ebsi.com
(240) 760-0551 |
Emergent BioSolutions Inc. |
Condensed Consolidated Balance Sheets |
(unaudited, in millions, except per share
data) |
|
|
|
|
|
June 30, 2021 |
|
December 31, 2020 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
447.5 |
|
|
$ |
621.3 |
|
Restricted cash |
0.2 |
|
|
0.2 |
|
Accounts receivable, net |
261.9 |
|
|
230.9 |
|
Inventories, net |
386.4 |
|
|
307.0 |
|
Prepaid expenses and other current assets |
66.1 |
|
|
36.5 |
|
Total current assets |
1,162.1 |
|
|
1,195.9 |
|
|
|
|
|
Property, plant and equipment, net |
743.5 |
|
|
644.1 |
|
Intangible assets, net |
633.1 |
|
|
663.1 |
|
Goodwill |
266.6 |
|
|
266.7 |
|
Other assets |
109.9 |
|
|
113.4 |
|
Total assets |
$ |
2,915.2 |
|
|
$ |
2,883.2 |
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
151.8 |
|
|
$ |
136.1 |
|
Accrued expenses |
33.8 |
|
|
46.9 |
|
Accrued compensation |
63.2 |
|
|
84.6 |
|
Debt, current portion |
28.8 |
|
|
33.8 |
|
Other current liabilities |
100.2 |
|
|
83.1 |
|
Total current liabilities |
377.8 |
|
|
384.5 |
|
|
|
|
|
Contingent consideration, net of current portion |
5.0 |
|
|
34.2 |
|
Debt, net of current portion |
825.2 |
|
|
841.0 |
|
Deferred tax liability |
53.2 |
|
|
53.2 |
|
Contract liabilities, net of current portion |
48.9 |
|
|
55.5 |
|
Other liabilities |
61.4 |
|
|
67.8 |
|
Total liabilities |
$ |
1,371.5 |
|
|
$ |
1,436.2 |
|
|
|
|
|
Stockholders' equity: |
|
|
|
Preferred stock, $0.001 par value; 15.0 shares authorized, no
shares issued or outstanding |
— |
|
|
— |
|
Common stock, $0.001 par value; 200.0 shares authorized, 54.9 and
54.3 shares issued; 53.7 and 53.1 shares outstanding,
respectively |
0.1 |
|
|
0.1 |
|
Additional paid-in capital |
804.4 |
|
|
784.9 |
|
Treasury stock, at cost, 1.2 common shares |
(39.6 |
) |
|
(39.6 |
) |
Accumulated other comprehensive loss, net |
(22.4 |
) |
|
(25.3 |
) |
Retained earnings |
801.2 |
|
|
726.9 |
|
Total stockholders' equity |
1,543.7 |
|
|
1,447.0 |
|
Total liabilities and stockholders' equity |
$ |
2,915.2 |
|
|
$ |
2,883.2 |
|
Emergent BioSolutions Inc. |
Condensed Consolidated Statements of
Operations |
(unaudited, in millions, except per share
data) |
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2021 |
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
Product sales, net |
$ |
181.2 |
|
$ |
298.5 |
|
$ |
319.1 |
|
$ |
446.7 |
|
Contract development and manufacturing services |
|
190.9 |
|
|
72.6 |
|
|
374.7 |
|
|
94.3 |
|
Contracts and grants |
|
25.4 |
|
|
23.6 |
|
|
46.7 |
|
|
46.2 |
|
Total revenues |
|
397.5 |
|
|
394.7 |
|
|
740.5 |
|
|
587.2 |
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
Cost of product sales and contract development and manufacturing
services |
|
227.8 |
|
|
129.8 |
|
|
327.1 |
|
|
206.7 |
|
Research and development |
|
48.9 |
|
|
47.9 |
|
|
101.4 |
|
|
90.6 |
|
Selling, general and administrative |
|
91.2 |
|
|
76.0 |
|
|
172.1 |
|
|
145.7 |
|
Amortization of intangible assets |
|
15.1 |
|
|
15.0 |
|
|
30.0 |
|
|
29.8 |
|
Total operating expenses |
|
383.0 |
|
|
268.7 |
|
|
630.6 |
|
|
472.8 |
|
|
|
|
|
|
|
|
|
|
Income from operations |
|
14.5 |
|
|
126.0 |
|
|
109.9 |
|
|
114.4 |
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
Interest expense |
|
(8.6 |
) |
|
(6.4 |
) |
|
(17.1 |
) |
|
(15.0 |
) |
Other, net |
|
1.3 |
|
|
1.1 |
|
|
(0.4 |
) |
|
— |
|
Total other income (expense), net |
|
(7.3 |
) |
|
(5.3 |
) |
|
(17.5 |
) |
|
(15.0 |
) |
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
7.2 |
|
|
120.7 |
|
|
92.4 |
|
|
99.4 |
|
Income taxes |
|
(2.6 |
) |
|
(28.0 |
) |
|
(18.1 |
) |
|
(19.2 |
) |
Net income |
$ |
4.6 |
|
$ |
92.7 |
|
$ |
74.3 |
|
$ |
80.2 |
|
|
|
|
|
|
|
|
|
|
Net income per common share* |
|
|
|
|
|
|
|
|
Basic |
$ |
0.09 |
|
$ |
1.76 |
|
$ |
1.40 |
|
$ |
1.53 |
|
Diluted |
$ |
0.09 |
|
$ |
1.73 |
|
$ |
1.37 |
|
$ |
1.51 |
|
|
|
|
|
|
|
|
|
|
Shares used in computing income per share |
|
|
|
|
|
|
|
|
Basic |
|
53.6 |
|
|
52.6 |
|
|
53.5 |
|
|
52.3 |
|
Diluted |
|
54.0 |
|
|
53.5 |
|
|
54.3 |
|
|
53.2 |
|
|
|
|
|
|
|
|
|
|
* Any differences in the calculation of net income per common share
is due to rounding. |
|
Emergent BioSolutions Inc.
Condensed Consolidated Statements of Cash
Flows(unaudited, in millions)
|
Six Months Ended June 30, |
|
2021 |
|
2020 |
Cash flows (used in) provided by operating activities: |
|
|
|
Net income |
$ |
74.3 |
|
|
$ |
80.2 |
|
Adjustments to reconcile to net income to net cash (used in)
provided by operating activities: |
|
|
|
Share-based compensation expense |
21.9 |
|
|
31.0 |
|
Depreciation and amortization |
61.9 |
|
|
56.8 |
|
Change in fair value of contingent consideration, net |
1.7 |
|
|
1.1 |
|
Amortization of deferred financing costs |
2.0 |
|
|
1.5 |
|
Deferred income taxes |
(3.2 |
) |
|
(3.7 |
) |
Other |
2.0 |
|
|
1.1 |
|
Changes in operating assets and liabilities: |
|
|
|
Accounts receivable |
(34.7 |
) |
|
12.1 |
|
Inventories |
(79.7 |
) |
|
(13.7 |
) |
Prepaid expenses and other assets |
(2.4 |
) |
|
(16.9 |
) |
Accounts payable |
8.0 |
|
|
(14.5 |
) |
Accrued expenses and other liabilities |
(55.4 |
) |
|
25.0 |
|
Accrued compensation |
(21.4 |
) |
|
(3.4 |
) |
Contract liabilities |
0.4 |
|
|
29.1 |
|
Net cash (used in) provided by operating activities: |
(24.6 |
) |
|
185.7 |
|
Cash flows used in investing activities: |
|
|
|
Purchases of property, plant and equipment |
(123.1 |
) |
|
(59.3 |
) |
Milestone payment from prior asset acquisition |
— |
|
|
(10.0 |
) |
Net cash used in investing activities: |
(123.1 |
) |
|
(69.3 |
) |
Cash flows used in financing activities: |
|
|
|
Principal payments on revolving credit facility |
— |
|
|
(20.0 |
) |
Principal payments on term loan facility |
(11.3 |
) |
|
(5.6 |
) |
Principal payments on convertible senior notes |
(10.6 |
) |
|
— |
|
Proceeds from share-based compensation activity |
10.0 |
|
|
23.1 |
|
Taxes paid for share-based compensation activity |
(13.0 |
) |
|
(11.7 |
) |
Contingent consideration payments |
(1.1 |
) |
|
(1.1 |
) |
Net cash used in financing activities: |
(26.0 |
) |
|
(15.3 |
) |
Effect of exchange rate changes on cash, cash equivalents and
restricted cash |
(0.1 |
) |
|
(0.1 |
) |
Net change in cash, cash equivalents and restricted cash |
(173.8 |
) |
|
101.0 |
|
Cash, cash equivalents and restricted cash at beginning of
period |
621.5 |
|
|
168.0 |
|
Cash, cash equivalents and restricted cash at end of period |
$ |
447.7 |
|
|
$ |
269.0 |
|
|
|
|
|
Reconciliation of Net Income to Adjusted
Net Income (1)
|
Three Months Ended June 30, |
($ in millions, except per share value) |
2021 |
2020 |
Source |
Net income |
$4.6 |
$92.7 |
|
Adjustments: |
+ Non-cash amortization charges |
16.1 |
15.8 |
Intangible Asset (IA) Amortization, Other Income |
+ Changes in fair value of contingent consideration |
0.6 |
0.5 |
COGS |
+ Acquisition-related costs (transaction & integration) |
0.1 |
— |
SG&A |
Tax effect |
(3.4) |
(3.3) |
|
Total adjustments: |
$13.4 |
$13.0 |
|
Adjusted net income |
$18.0 |
$105.7 |
|
Adjusted net income per diluted share |
$0.33 |
$1.98 |
|
|
Six Months Ended June 30, |
($ in millions, except per share value) |
2021 |
2020 |
Source |
Net income |
$74.3 |
$80.2 |
|
Adjustments: |
+ Non-cash amortization charges |
32.1 |
31.3 |
Intangible Asset (IA) Amortization, Other Income |
+ Changes in fair value of contingent consideration |
1.7 |
1.1 |
COGS |
+ Acquisition-related costs (transaction & integration) |
0.3 |
— |
SG&A |
Tax effect |
(6.8) |
(6.6) |
|
Total adjustments: |
$27.3 |
$25.8 |
|
Adjusted net income |
$101.6 |
$106.0 |
|
Adjusted net income per diluted share |
$1.87 |
$1.99 |
|
($ in millions) |
Reaffirmed 2021 Full Year
Forecast |
Source |
Net income |
$340 - $415 |
|
Adjustments: |
+ Non-cash amortization charges |
64 |
IA Amortization, Other Income |
+ Changes in fair value of contingent consideration |
3 |
COGS |
+ Acquisition-related costs (transaction & integration) |
2 |
SG&A |
Tax effect |
(14) |
|
Total adjustments: |
$55 |
|
Adjusted net income |
$395 - $470 |
|
Reconciliation of Net Income to Adjusted
EBITDA (1)
|
Three Months Ended June 30, |
($ in millions) |
2021 |
2020 |
Net income |
$4.6 |
$92.7 |
Adjustments: |
+ Depreciation & amortization |
33.2 |
28.6 |
+ Provision for income taxes |
2.6 |
28.0 |
+ Total interest expense, net |
8.4 |
6.3 |
+ Changes in fair value of contingent consideration |
0.6 |
0.5 |
+ Acquisition-related costs (transaction & integration) |
0.1 |
— |
Total adjustments |
$44.9 |
$63.4 |
Adjusted EBITDA |
$49.5 |
$156.1 |
|
Six Months Ended June 30, |
($ in millions) |
2021 |
2020 |
Net income |
$74.3 |
$80.2 |
Adjustments: |
+ Depreciation & amortization |
61.9 |
56.8 |
+ Provision for income taxes |
18.1 |
19.2 |
+ Total interest expense, net |
16.7 |
14.1 |
+ Changes in fair value of contingent consideration |
1.7 |
1.1 |
+ Acquisition-related costs (transaction & integration) |
0.3 |
— |
Total adjustments |
$98.7 |
$91.2 |
Adjusted EBITDA |
$173.0 |
$171.4 |
($ in millions) |
Reaffirmed 2021 Full Year
Forecast |
Net income |
$340 - $415 |
Adjustments: |
+ Depreciation & amortization |
129 |
+ Provision for income taxes |
114-139 |
+ Total interest expense, net |
32 |
+ Changes in fair value of contingent consideration |
3 |
+ Acquisition-related costs (transaction & integration) |
2 |
Total adjustments |
$280 - $305 |
Adjusted EBITDA |
$620 - $720 |
Reconciliation of Gross Margin
(1)
|
Three Months Ended June 30, |
($ in millions) |
2021 |
2020 |
Total revenues |
$397.5 |
$394.7 |
- Contract and grants revenues |
(25.4) |
(23.6) |
Adjusted revenues |
$372.1 |
$371.1 |
|
|
|
Cost of product sales and contract development and manufacturing
services ("COGS") |
$227.8 |
$129.8 |
|
|
|
Gross margin (adjusted revenues minus COGS) |
$144.3 |
$241.3 |
Gross margin % (gross margin divided by adjusted revenues) |
39% |
65% |
|
Six Months Ended June 30, |
($ in millions) |
2021 |
2020 |
Total revenues |
$740.5 |
$587.2 |
- Contract and grants revenues |
(46.7) |
(46.2) |
Adjusted revenues |
$693.8 |
$541.0 |
|
|
|
Cost of product sales and contract development and manufacturing
services ("COGS") |
$327.1 |
$206.7 |
|
|
|
Gross margin (adjusted revenues minus COGS) |
$366.7 |
$334.3 |
Gross margin % (gross margin divided by adjusted revenues) |
53% |
62% |
Reconciliation of Net Research and
Development Expenses (1)
|
Three Months Ended June 30, |
($ in millions) |
2021 |
2020 |
Research and Development Expenses |
$48.9 |
$47.9 |
Adjustments: |
- Contracts and Grants Revenue |
(25.4) |
(23.6) |
Net Research and Development Expenses |
23.5 |
$24.3 |
Adjusted Revenue (Total Revenue less Contracts and Grants
Revenue) |
372.1 |
$371.1 |
Net R&D as % of Adjusted Revenue (Net R&D Margin) |
6% |
7% |
|
Six Months Ended June 30, |
($ in millions) |
2021 |
2020 |
Research and Development Expenses |
$101.4 |
$90.6 |
Adjustments: |
- Contracts and Grants Revenue |
(46.7) |
(46.2) |
Net Research and Development Expenses |
54.7 |
$44.4 |
Adjusted Revenue (Total Revenue less Contracts and Grants
Revenue) |
693.8 |
$541.0 |
Net R&D as % of Adjusted Revenue (Net R&D Margin) |
8% |
8% |
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