Emergent BioSolutions Inc. (NYSE:EBS) today announced preliminary
unaudited 2016 financial results and guidance for 2017.
Daniel J. Abdun-Nabi, president and chief executive officer of
Emergent BioSolutions, said, “We are very pleased with our 2016
accomplishments. Operationally, we completed the spin-off of Aptevo
Therapeutics, secured approval from the Food and Drug
Administration for Building 55, secured substantial development
funding for NuThrax, and announced two procurement opportunities
for BioThrax, a five-year follow-on procurement contract with the
Centers for Disease Control and Prevention and a notice of intent
to procure from the Biomedical Advanced Research and Development
Authority. These BioThrax contract actions support the current U.S.
government post-exposure prophylaxis requirement for 25 million
anthrax vaccine regimens, which equates to 75 million doses of
BioThrax, as stated in the BARDA notice of intent. Financially, our
core business remains strong as we remain committed to developing,
commercializing and providing medical countermeasures that address
serious public health threats worldwide while continuing to manage
our costs and make strategic investments.”
(I) Preliminary Full Year 2016 Results
(unaudited)
|
Combined Basis (1) |
ContinuingOperations Basis (2) |
Total Revenue |
$500M
to $505M |
$480M
to $485M |
BioThrax® Sales |
~$237M |
Net Income |
$44M
to $48M |
$60M
to $64M |
Adjusted Net Income
(3) |
$64M
to $68M |
$75M
to $79M |
EBITDA (3) |
$100M
to $104M |
$131M
to $135M |
Cash |
~$270M |
(1) The combined basis reflects the company’s operations
including the operations of the former biosciences business that
was spun-off as Aptevo Therapeutics in August 2016.(2) The
continuing operations basis excludes Aptevo operations.(3) See
“Reconciliation of Net Income to Adjusted Net Income and EBITDA”
for a definition of terms and a reconciliation table.
RevenueOn a combined basis, the company
anticipates full year 2016 total revenue of $500 to $505 million,
the midpoint of which represents a $20 million decline from 2015.
This decline is due primarily to lower BioThrax® (Anthrax Vaccine
Adsorbed) sales of approximately $237 million versus $294 million,
and the impact of seven months of Aptevo-related revenues in 2016
versus a full year in 2015, offset by increases in Other Biodefense
product sales and Contract & Grant revenue.
Net Income (GAAP and Adjusted)On a combined
basis, the company anticipates full year 2016 net income of $44 to
$48 million, the midpoint of which represents a 27% decline from
2015. Full year 2016 adjusted net income was $64 to $68 million,
the midpoint of which represents a 13% decline from 2015 (see
“Reconciliation of Net Income to Adjusted Net Income and EBITDA”
for a definition of terms and a reconciliation table). The
year-over-year decline reflects the impact of the decline in
BioThrax sales.
Cash and Cash EquivalentsFor the full year
2016, the company anticipates cash and cash equivalents at year end
of approximately $270 million.
NoteThe preliminary 2016 financial results are
subject to revision and will be finalized upon the completion of
the company’s external audit, which is anticipated in late February
2017. Once the external audit is completed, the company may report
financial results that could differ, and the differences could be
material.
(II) 2017 Financial Outlook
|
Full Year 2017 |
Total Revenue |
$500M
to $530M |
•
BioThrax® Sales |
$265M
to $280M |
Net Income |
$60M
to $70M |
Adjusted Net Income
(1) |
$70M
to $80M |
EBITDA (1) |
$135M
to $145M |
(1) See “Reconciliation of Net Income to Adjusted Net Income and
EBITDA” for a definition of terms and a reconciliation table.
Full Year 2017For the full year of 2017, the
company outlook includes the impact of continued deliveries of
BioThrax to the strategic national stockpile (SNS) under the CDC
follow-on procurement contract signed in December 2016, anticipated
deliveries to the SNS under the BARDA notice of intent to procure,
the timing of sales of certain Other Biodefense products, expanded
capacity in our CMO services business and a significant reduction
in Contract & Grant revenue due to completion of certain funded
projects in 2016 that are not anticipated to recur in 2017. The
outlook for 2017 further reflects the impact of the company’s plan
to address its operational and administrative costs, including
anticipated restructuring charges, to ensure they are sized and
aligned to support the company’s growth. The outlook for 2017 does
not include estimates for potential new corporate development or
other M&A transactions.
Q1 2017For the first quarter of 2017, the
company anticipates total revenues of $120 to $135 million.
(III) Reconciliation of GAAP Net Income to Adjusted Net
Income and EBITDA
This press release contains two financial measures (Adjusted Net
Income and EBITDA (Earnings Before Interest, Taxes, Depreciation
and Amortization)) that are considered “non-GAAP” financial
measures under applicable SEC 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. EBITDA reflects net income excluding the impact of
depreciation, amortization, interest expense and provision for
income taxes. 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 to Adjusted Net Income
(Combined Basis)
($ in
millions) |
Twelve Months Ended December 31, |
2017 (Forecast) |
2016 (Estimated) |
2015 (Actual) |
Source |
Net
Income |
$60.0 to $70.0 |
|
$44.0 to $48.0 |
|
$ |
62.9 |
|
|
NA |
Adjustments: |
|
|
|
|
|
|
|
|
|
Acquisition-related costs (transaction & integration) |
1.0 |
|
10.0 |
|
|
5.5 |
|
|
SG&A |
Non-cash
amortization charges |
7.0 |
|
9.0 |
|
|
10.8 |
|
|
COGS, SG&A, Other Income |
Impact of
purchase accounting on inventory step-up |
-- |
|
1.0 |
|
|
0.6 |
|
|
COGS |
Restructuring and other |
9.0 |
|
11.0 |
|
|
1.2 |
|
|
SG&A |
Tax
effect |
(7.0 |
) |
(11.0 |
) |
|
(5.4 |
) |
|
NA |
Total Adjustments |
10.0 |
|
20.0 |
|
|
12.7 |
|
|
NA |
Adjusted Net
Income |
$70.0 to $80.0 |
|
$64.0 to $68.0 |
|
$ |
75.6 |
|
|
NA |
Reconciliation of Net Income to Adjusted Net Income
(Continuing Operations Basis)
($ in
millions) |
Twelve Months Ended December 31, |
2017 (Forecast) |
2016 (Estimated) |
Source |
Net Income |
$60.0 to $70.0 |
|
$60.0 to $64.0 |
|
|
NA |
Adjustments: |
|
|
|
|
|
|
Acquisition-related costs (transaction & integration) |
1.0 |
|
2.0 |
|
|
SG&A |
Non-cash
amortization charges |
7.0 |
|
9.0 |
|
|
COGS, SG&A, Other Income |
Impact of
purchase accounting on inventory step-up |
-- |
|
1.0 |
|
|
COGS |
Restructuring and other |
9.0 |
|
11.0 |
|
|
SG&A |
Tax
effect |
(7.0 |
) |
(8.0 |
) |
|
NA |
Total Adjustments |
10.0 |
|
15.0 |
|
|
NA |
Adjusted Net Income |
$70.0 to $80.0 |
|
$75.0 to $79.0 |
|
|
NA |
Reconciliation of Net Income to EBITDA (Combined
Basis)
($ in
millions) |
Twelve Months Ended December 31, |
2017 (Forecast) |
|
2016 (Estimated) |
|
2015 (Actual) |
Source |
Net
Income |
$60.0 to $70.0 |
|
$44.0 to $48.0 |
|
$ |
62.9 |
|
NA |
Adjustments: |
|
|
|
|
|
|
|
|
+
Depreciation & Amortization |
39.0 |
|
36.0 |
|
|
33.8 |
|
COGS, SG&A, R&D |
+
Provision For Income Taxes |
28.0 |
|
13.0 |
|
|
26.9 |
|
Income Taxes |
+
Total Interest Expense |
8.0 |
|
7.0 |
|
|
6.5 |
|
Other Income |
Total Adjustments |
75.0 |
|
56.0 |
|
|
67.2 |
|
NA |
EBITDA |
$135.0 to $145.0 |
|
$100.0 to $104.0 |
|
$ |
130.1 |
|
NA |
Reconciliation of Net Income to EBITDA (Continuing
Operations Basis)
($ in
millions) |
Twelve Months Ended December 31, |
2017 (Forecast) |
|
2016 (Estimated) |
|
Source |
Net Income |
$60.0 to $70.0 |
|
$60.0 to $64.0 |
|
NA |
Adjustments: |
|
|
|
|
|
+
Depreciation & Amortization |
39.0 |
|
35.0 |
|
COGS, SG&A, R&D |
+
Provision For Income Taxes |
28.0 |
|
29.0 |
|
Income Taxes |
+
Total Interest Expense |
8.0 |
|
7.0 |
|
Other Income |
Total Adjustments |
75.0 |
|
71.0 |
|
NA |
EBITDA |
$135.0 to $145.0 |
|
$131.0 to $135.0 |
|
NA |
Presentation WebcastThe company will provide an
update on the current business and discuss preliminary 2016
financial results, the forecast and corporate goals for 2017 and
long term goals for 2020 during their presentation at the 35th
Annual J.P. Morgan Healthcare Conference on January 10, 2017.
A live webcast of the presentation can be accessed through
Emergent’s website. Visit www.emergentbiosolutions.com and select
the “Investors” section. An on-demand replay of the webcast can
also be accessed in the investors section after the presentation
has concluded.
About Emergent BioSolutionsEmergent
BioSolutions is a global specialty biopharmaceutical company
dedicated to one simple mission—to protect and enhance life. We
develop, manufacture, and deliver a portfolio of medical
countermeasures for biological and chemical threats as well as
emerging infectious diseases. Through our work, we envision
protecting and enhancing 50 million lives with our products by
2025. Additional information about the company may be found at
www.emergentbiosolutions.com. Follow us @emergentbiosolu.
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 any other statements containing the words "believes,"
"expects," "anticipates," "intends," "plans," "targets,"
"forecasts," "estimates" and similar expressions in conjunction
with, among other things, obtaining a BioThrax procurement contract
from the Biomedical Advanced Research and Development Authority
(BARDA) under the recently received notice of intent, discussions
of the Company's outlook, financial performance or financial
condition, growth strategy, product sales, government development
or procurement contracts or awards, government appropriations,
manufacturing capabilities, product development, Emergency Use
Authorization (EUA) or other regulatory approvals or expenditures
and plans to increase our operational efficiencies and cost
structure 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 our
ability to obtain a BioThrax procurement contract from BARDA under
the recent notice of intent; the availability of funding and the
exercise of options under our BioThrax and NuThrax™ (anthrax
vaccine adsorbed with CPG 7909 adjuvant) contracts; appropriations
for procurement of BioThrax and NuThrax; our ability to secure EUA
pre-authorization approval and licensure of NuThrax from the U.S.
Food and Drug Administration within the anticipated timeframe, if
at all; our ability to achieve our planned operational efficiencies
and targeted levels of cost savings; availability of funding for
our U.S. government grants and contracts; whether the operational,
marketing and strategic benefits of the spin-off of our biosciences
business can be achieved and the timing of any such benefits; our
ability to identify and acquire or in-license products or
late-stage product candidates that satisfy our selection criteria;
whether anticipated synergies and benefits from an acquisition or
in-license are 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; the outcome of the purported class action
lawsuit filed against us and possible other future material legal
proceedings; our ability to meet operating and financial
restrictions placed on us and our subsidiaries that are contained
in our senior credit facility; the rate and degree of market
acceptance and clinical utility of our products; the success of our
ongoing and planned development programs; 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 &
Exchange Commission (SEC), when evaluating our forward-looking
statements.
Investor Contact:
Robert G. Burrows
Vice President, Investor Relations
240-631-3280
BurrowsR@ebsi.com
Media Contact:
Tracey Schmitt Lintott
Senior Vice President, Global Public Affairs
240-631-3281
SchmittT@ebsi.com
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