ALBANY, New York, May 9, 2017 /PRNewswire/ -- AMRI (NASDAQ:
AMRI) today reported financial and operating results for the first
quarter ended March 31, 2017 and
provided an update to its outlook for 2017.
Highlights:
- First quarter total revenue of $163.8
million, up 55% from 2016
- First quarter basic and diluted EPS $(0.25); non-GAAP diluted EPS of $0.13
- First quarter net loss of $(10.7)
million; non-GAAP net income of $5.7
million
- First quarter adjusted EBITDA of $24.0
million, up 83% from 2016
- Company confirms 2017 financial guidance
Non-GAAP net income, non-GAAP diluted EPS and adjusted EBITDA
are non-GAAP financial measures. For a discussion of these measures
and reconciliations to U.S. GAAP measures, see "Non-GAAP Financial
Measures" and Tables 1, 2 and 3.
"We delivered an excellent first quarter, driven by 56 percent
growth in contract revenue, 7 percent on an organic basis,
including double digit organic growth in our Discovery, Development
and Analytical Services (DDS) and Active Pharmaceutical Ingredient
(API) businesses," said William S.
Marth, AMRI's president and chief executive officer. "GAAP
income from operations increased $6
million, a 150% increase quarter over quarter,
and adjusted EBITDA increased $11 million, an 83% increase quarter over
quarter, illustrating strong and efficient execution and leverage
across our operations. We are confident that these trends will
continue through the year and are maintaining our outlook for 2017,
which includes 28% growth of contract revenue, 7% growth of organic
contract revenue, and double digit earnings growth at the
midpoint."
First Quarter 2017 Results
Total revenue for the first quarter of 2017 was $163.8 million, an increase of 55%, compared to
total revenue of $105.6 million
reported in the first quarter of 2016.
Total contract revenue for the first quarter of 2017 was
$160.2 million, an increase of 56%
compared to contract revenue of $102.8
million reported in the first quarter of 2016, and organic
contract revenue increased 7%.
Contract gross margin was 23% for the first quarter of 2017,
consistent with contract gross margin for the first quarter of
2016. Non-GAAP contract gross margin was 27% in the first quarter
of 2017, consistent with the first quarter of 2016 and reflects
increased gross margin within our Drug Product (DP) business,
offset by the addition of Euticals' Fine Chemicals (FC) and API
businesses.
Recurring royalty revenue in the first quarter of 2017 was
$3.6 million, an increase of 31% from
$2.7 million in the first quarter of
2016 due primarily to the addition of royalties resulting from our
collaboration partner's sales of nitroprusside.
Selling, general and administrative (SG&A) expense in the
first quarter of 2017 was $33.4
million, up 36% from $24.6
million in the first quarter of 2016. Non-GAAP SG&A
expense in the first quarter of 2017 was $27.0 million, up 47% from $18.4 million in the first quarter of 2016, due
largely to additional SG&A from the Euticals' acquisition and
investments we have made in key support functions.
Net loss was $(10.7) million, or
$(0.25) per basic and diluted share,
in the first quarter of 2017, compared to $(10.1) million, or $(0.29) per basic and diluted share for the first
quarter of 2016. Non-GAAP net income in the first quarter was
$5.7 million, or $0.13 per diluted share, compared to $2.4 million, or $0.07 per diluted share, for the first quarter of
2016.
Adjusted EBITDA in the first quarter of 2017 was $24.0 million, an increase of $11.0 million or 83%, compared to the first
quarter of 2016.
At March 31, 2017, AMRI had cash
and cash equivalents of $35.2
million, compared to $52.0
million at December 31, 2016.
During the first quarter of 2017, we used cash of $6.4 million in operating activities primarily
due to the timing of payments attributable to severance, employee
compensation and benefits and payments to vendors that were
primarily incurred and accrued as of December 31, 2016, as well as payments associated
with increased inventory levels during the period. These outflows
were partially offset by collections from customers during the
period. We used cash of $4.1 million
in investing activities, primarily attributable to $3.9 million of capital expenditures, and we used
cash of $7.2 million in financing
activities, primarily related to the principal payments of
long-term debt of $4.0 million and
net repayments on short-term borrowings of $2.0 million.
Segment Results
Active
Pharmaceutical Ingredients (API)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
March
31,
|
|
(Unaudited; dollars
in thousands)
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
API Contract Revenue
(1)
|
|
$
103,364
|
|
$
54,369
|
|
API Royalty
Revenue
|
|
2,765
|
|
2,741
|
|
API Total Revenue
|
|
$
106,129
|
|
$
57,110
|
|
|
|
|
|
|
|
Cost of Contract
Revenue (2)
|
|
$
79,881
|
|
$
40,666
|
|
|
|
|
|
|
|
Contract Gross
Profit
|
|
$
23,483
|
|
$
13,703
|
|
Contract Gross
Margin
|
|
22.7%
|
|
25.2%
|
|
|
|
|
|
|
|
Non-GAAP Contract
Gross Profit (3)
|
|
$
28,334
|
|
$
17,239
|
|
Non-GAAP Contract
Gross Margin (3)
|
|
27.4%
|
|
31.7%
|
|
|
|
|
|
|
|
Gross Profit
(4)
|
|
$
26,248
|
|
$
16,444
|
|
Gross Margin
(4)
|
|
24.7%
|
|
28.8%
|
|
|
|
|
|
|
|
Non-GAAP Gross Profit
(3) (4)
|
|
$
31,099
|
|
$
19,980
|
|
Non-GAAP Gross Margin
(3) (4)
|
|
29.3%
|
|
35.0%
|
|
|
|
|
|
|
|
(1) To conform to
current year presentation, contract revenue for the three months
ended March 31, 2016 in the amount of $333 related to medium-scale
activities in our Wisconsin facility has been reclassified from API
to DDS.
|
|
(2) To better align
with underlying activities and to conform to current year
presentation, cost of contract revenue for the three months ended
March 31, 2016 in the amount of $142 previously classified as DDS
has been reclassified to API.
|
|
(3) Refer to Table 1
included in this release for the reconciliation of U.S. GAAP to
non-GAAP measures.
|
|
(4) Includes
royalties
|
API contract revenue for the first quarter of 2017 increased 90%
compared to the first quarter of 2016, due to $43.4 million of incremental revenue from our
Euticals' API business and organic growth.
API contract gross margin for the first quarter of 2017
decreased 3 percentage points compared to the first quarter of
2016, primarily due to gross margins attributable to Euticals as
compared to our legacy API business. API non-GAAP contract gross
margin for the first quarter of 2017 decreased 4 percentage points
from the first quarter of 2016 also as a result of lower margins of
Euticals' API business as compared to our legacy API business.
Discovery,
Development and Analytical Services (DDS)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
March
31,
|
|
(Unaudited; dollars
in thousands)
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
DDS Contract Revenue
(1)
|
|
$
29,167
|
|
$
23,536
|
|
Cost of Contract
Revenue (2)
|
|
20,974
|
|
17,261
|
|
Contract Gross
Profit
|
|
$
8,193
|
|
$
6,275
|
|
Contract Gross
Margin
|
|
28.1%
|
|
26.7%
|
|
|
|
|
|
|
|
Non-GAAP Contract
Gross Profit (3)
|
|
$
8,627
|
|
$
6,688
|
|
Non-GAAP Contract
Gross Margin(3)
|
|
29.6%
|
|
28.4%
|
|
|
|
|
|
|
|
(1) To conform to
current year presentation, contract revenue for the three months
ended March 31, 2016 in the amount of $333 related to medium-scale
activities in our Wisconsin facility has been reclassified from API
to DDS.
|
|
|
|
(2) To better align
with underlying activities and to conform to current year
presentation, cost of contract revenue for the three months ended
March 31, 2016 in the amount of $249 previously classified as DDS
has been reclassified to API ($142) and DP ($108).
|
|
|
|
(3) Refer to Table 1
included in this release for the reconciliation of U.S. GAAP to
non-GAAP measures.
|
DDS contract revenue for the first quarter of 2017 increased 24%
compared to the first quarter of 2016, due primarily to strong
growth in Discovery and Chemical Development. DDS contract gross
margin increased 1 percentage point in the first quarter of 2017 as
compared to the first quarter of 2016. DDS non-GAAP contract gross
margin increased 1 percentage point to 30% in the first quarter of
2017, driven by higher discovery services and chemical development
margins.
Drug Product
(DP)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
March
31,
|
(Unaudited; dollars
in thousands)
|
|
2017
|
|
2016
|
|
|
|
|
|
DP Contract
Revenue
|
|
$
22,534
|
|
$
24,933
|
DP Royalty
Revenue
|
|
$
832
|
|
$
-
|
DP Total Revenue
|
|
$
23,366
|
|
$
24,933
|
|
|
|
|
|
Cost of Contract
Revenue (1)
|
|
17,322
|
|
21,436
|
|
|
|
|
|
Contract Gross
Profit
|
|
$
5,212
|
|
$
3,497
|
Contract Gross
Margin
|
|
23.1%
|
|
14.0%
|
|
|
|
|
|
Non-GAAP Contract
Gross Profit (2)
|
|
$
5,545
|
|
$
3,837
|
Non-GAAP Contract
Gross Margin (2)
|
|
24.6%
|
|
15.4%
|
|
|
|
|
|
Gross Profit
(3)
|
|
$
6,044
|
|
$
3,497
|
Gross Margin
(3)
|
|
25.9%
|
|
14.0%
|
|
|
|
|
|
Non-GAAP Gross Profit
(2) (3)
|
|
$
6,377
|
|
$
3,837
|
Non-GAAP Gross Margin
(2) (3)
|
|
27.3%
|
|
15.4%
|
|
|
|
|
|
(1) To better align
with underlying activities and to conform to current year
presentation, cost of contract revenue for the three months ended
March 31, 2016 in the amount of $108 previously classified as DDS
has been reclassified to DP.
|
|
|
|
|
|
(2) Refer to Table 1
included in this release for the reconciliation of U.S. GAAP to
non-GAAP measures.
|
|
|
|
|
|
(3) Includes
royalties when applicable
|
DP contract revenue for the first quarter of 2017 decreased 10%
compared to the first quarter of 2016, primarily due to timing of
shipments and planned site maintenance activities, partially offset
by higher collaboration arrangement revenue. DP contract gross
margin and non-GAAP contract gross margin for the first quarter
2017 both increased 9 percentage points compared to the first
quarter of 2016, primarily driven by the strong operational
performance at the Albuquerque, NM
facility.
DP royalty revenue in the first quarter of 2017, reflects the
addition of royalties resulting from our collaboration partner's
sales of nitroprusside, which began in the fourth quarter of
2016.
Fine Chemicals
(FC)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
March
31,
|
|
(Unaudited; dollars
in thousands)
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
FC Contract
Revenue
|
|
$
5,160
|
|
$
-
|
|
Cost of Contract
Revenue
|
|
4,601
|
|
-
|
|
Contract Gross
Profit
|
|
$
559
|
|
-
|
|
Contract Gross
Margin
|
|
10.8%
|
|
-
|
|
|
|
|
|
|
|
Non-GAAP Contract
Gross Profit (1)
|
|
$
746
|
|
-
|
|
Non-GAAP Contract
Gross Margin (1)
|
|
14.5%
|
|
-
|
|
|
|
|
|
|
|
(1) Refer to Table 1
included in this release for the reconciliation of U.S. GAAP to
non-GAAP measures.
|
FC is a new reporting segment for AMRI resulting from the
acquisition of Euticals in July 2016.
Consequently, there are no comparable amounts for the first quarter
of 2016.
Financial Outlook
AMRI's guidance takes into account a number of factors,
including expected financial results for 2017, anticipated tax
rates, foreign currency fluctuations and shares outstanding.
AMRI's estimates for full year 2017 are consistent with
estimates previously provided on February
21, 2017:
2017
Guidance
|
|
|
|
Total
Revenue
|
$710 to $740
million
|
Add:
Negative effect of foreign exchange
|
(1%)
|
Revenue growth,
reported at the mid point
|
28%
|
Less:
Contributions from acquisitions (1)
|
(15% to
16%)
|
Revenue growth,
organic (2)
|
7%
|
DDS Contract revenue growth, organic
|
12%
|
API Contract revenue growth, organic
|
8%
|
DP
Contract revenue growth, organic
|
8%
|
FC
Contract revenue growth, organic
|
(28%)
|
GAAP contract
margin
|
26%
|
Non-GAAP contract
margin (3)
|
~29%
|
GAAP R&D expense,
as a percent of revenue
|
2%
|
Non-GAAP R&D
expense, as a percent of revenue
|
2%
|
GAAP SG&A, as a
percent of revenue
|
18%
|
Non-GAAP SG&A, as
a percent of revenue (3)
|
15%
|
GAAP Net
loss
|
($12) to ($7)
million
|
Non-GAAP Net income
(3)
|
$47 to $52
million
|
Adjusted EBITDA
(3)
|
$135 to $145
million
|
Adjusted EBITDA, as a
percent of revenue (3)
|
19% to 20%
|
GAAP diluted
EPS
|
($0.28) to
($0.16)
|
Non-GAAP diluted EPS
(3) (4)
|
$1.08 to
$1.20
|
Capital
expenditures
|
$35 to $40
million
|
|
|
Footnotes to Guidance
Table
|
|
|
|
(1) Reflects the
acquisition of Euticals which was completed in July
2016.
|
(2) Organic revenue
growth is defined as reported revenue growth adjusted for
acquisitions (Euticals) and foreign currency
translation.
|
(3) Refer to Table 4
included in this release for reconciliation of forward-looking
non-GAAP financial measures to forward looking GAAP financial
measures.
|
(4) Assumes tax rate
of approximately 28% and 44 million shares outstanding.
|
First Quarter Results Conference Call
AMRI will host a conference call and webcast today
at 8:30 a.m. ET to discuss first quarter 2017 results, as
well as guidance for 2017. The conference call can be accessed
by dialing (866) 208-5728 (domestic calls) or (224) 633-1279
(international calls) at 8:20 a.m. ET
and entering passcode 7657377. The webcast and supplementing slides
can be accessed on the company's website at www.amriglobal.com.
A replay of the conference call can be accessed for 24 hours at
(855) 859-2056 (domestic calls) or (404)
537-3406 (international calls) and entering passcode 75749093.
Replays of the webcast can also be accessed for up to 90 days after
the call via the investor area of the company's website at
http://ir.amriglobal.com.
About AMRI
Albany Molecular Research
Inc. (AMRI) is a global contract research and manufacturing
organization that has been working with the Life Sciences industry
to improve patient outcomes and the quality of life for more than
two decades. With locations in North America, Europe and Asia, our key business
segments include Discovery and Development Services (DDS), Active
Pharmaceutical Ingredients (API), Drug Product (DP), and Fine
Chemicals (FC). For more information about AMRI, please visit our
website at www.amriglobal.com or follow us on Twitter
(@amriglobal).
Forward-looking Statements
This press release
includes forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These
forward-looking statements include, but are not limited to, all of
the estimates under "Financial Outlook" and statements regarding,
among other things, the performance of the Company's previously
acquired businesses, the strength of the Company's commercial
operations and prospects, projections regarding future revenues and
financial performance, and the Company's momentum and long-term
growth. The words "outlook", "guidance", "anticipates", "believes",
"expects", "may", "plans", "predicts", "will", "potential", "goal"
and similar expressions are intended to identify forward-looking
statements, although not all forward-looking statements contain
these identifying words. Readers should not place undue reliance on
these forward-looking statements. The Company's actual results may
differ materially from such forward-looking statements as a result
of numerous factors, some of which the Company may not be able to
predict and may not be within the Company's control. Factors that
could cause such differences include, but are not limited to,
changes in customers' spending and demand and the trends in
pharmaceutical and biotechnology companies' outsourcing of
manufacturing services and research and development; the Company's
ability to provide quality and timely services and to compete with
other companies providing similar services; the Company's ability
to comply with strict regulatory requirements; the Company's
ability to successfully integrate past and future acquisitions and
to realize the expected benefits of each; disruptions in the
Company's ability to source raw materials; a change in the
Company's relationships with its largest customers; the Company's
ability to service its indebtedness; the Company's ability to
protect its technology and proprietary information and the
confidential information of its customers; the Company's ability to
develop products of commercial value under its collaboration
arrangements; the risk of patent infringement and other litigation;
as well as those risks discussed in the Company's Annual Report on
Form 10-K for the year ended December 31,
2016 as filed with the Securities and Exchange Commission
(SEC) on March 16, 2017, subsequent
Quarterly Reports filed with the SEC and the Company's other SEC
filings. The financial guidance offered by senior management with
respect to 2017 represents a point-in-time estimate and is based on
information as of the date of this press release. Senior management
has made numerous assumptions in providing this guidance which,
while believed to be reasonable, may not prove to be accurate.
Numerous factors, including those noted above, may cause actual
results to differ materially from the guidance provided. The
Company expressly disclaims any current intention or obligation to
update the guidance provided or any other forward-looking statement
in this press release to reflect future events or changes in facts
assumed for purposes of providing this guidance or otherwise
affecting the forward-looking statements contained in this press
release.
Non-GAAP Financial Measures
To supplement our
financial results prepared in accordance with U.S. GAAP, we have
presented non-GAAP measures of contract gross profit, contract
gross margin, gross profit, gross margin, SG&A, net income, and
earnings per diluted share, adjusted to exclude certain charges
(and gains when applicable) that relate to specific events or
transactions, such as impairment charges, restructuring charges,
executive transition costs, business acquisition costs, realized
and unrealized gains and losses on foreign currency transactions
related to business acquisitions, and ERP implementation costs.
Management typically excludes these amounts when evaluating our
operating performance and believes that the resulting non-GAAP
measures provide investors with a consistent basis for comparison
across periods and, therefore, are useful to investors in assessing
our operating performance.
Our U.S. GAAP measures are also adjusted to exclude certain
non-cash charges (and gains when applicable) such as non-cash debt
interest and amortization charges, share-based compensation
expense, acquisition accounting inventory adjustments, and
acquisition accounting depreciation and amortization for the
periods presented for 2017 and 2016. Management typically excludes
the amounts described above when evaluating our operating
performance and believes that the resulting non-GAAP measures are
useful to investors in assessing our operating performance.
We have also presented the non-GAAP measure of adjusted EBITDA,
which in addition to the items excluded above, further excludes the
impact of interest income and expense, depreciation and
amortization expense, and income tax expense or benefit.
We believe presentation of our non-GAAP measures enhances an
overall understanding of our historical financial performance
because we believe these measures are an indication of the
performance of our base business. Management uses these non-GAAP
measures as a basis for evaluating our financial performance as
well as for budgeting and forecasting of future periods. For these
reasons, we believe they can be useful to investors. The
presentation of this additional information should not be
considered in isolation or as a substitute for the related GAAP
measures. Reconciliations of these non-GAAP measures to the most
directly comparable GAAP financial measures are set forth in Tables
1-3.
A reconciliation of forward-looking non-GAAP financial measures
to the most directly comparable GAAP financial measures has been
included in Table 4.
A reconciliation of organic revenue financial measures to the
most directly comparable GAAP financial measures has been included
in Table 5.
Albany Molecular
Research, Inc.
|
Selected Condensed
Consolidated Balance Sheet Data
|
(unaudited)
|
|
(Dollars in
thousands)
|
|
March
31,
|
December
31,
|
|
|
2017
|
2016
|
|
|
|
|
Cash and cash
equivalents
|
|
$
35,193
|
$
52,000
|
Restricted
cash
|
|
$
243
|
$
236
|
Accounts receivable,
net
|
|
$
139,705
|
$
144,795
|
Royalty income
receivable
|
|
$
5,236
|
$
3,486
|
Inventory
|
|
$
174,043
|
$
167,111
|
Total current
assets
|
|
$
385,150
|
$
392,911
|
Property and
equipment, net
|
|
$
360,282
|
$
364,806
|
Total
assets
|
|
$
1,163,529
|
$
1,209,648
|
|
|
|
|
Total current
liabilities
|
|
$
167,012
|
$
175,518
|
Long‑term debt,
excluding current installments, net of unamortized
discount
|
|
$
607,246
|
$
604,476
|
Total
liabilities
|
|
$
866,730
|
$
910,666
|
Total stockholders'
equity
|
|
$
296,799
|
$
298,982
|
Total liabilities and
stockholders' equity
|
|
$
1,163,529
|
$
1,209,648
|
Albany Molecular
Research, Inc.
|
Condensed
Consolidated Statements of Operations (unaudited)
|
|
|
|
Three Months Ended
|
|
|
March
31,
|
(Dollars in
thousands, except for per share
data)
|
|
2017
|
|
2016
|
|
|
|
|
|
Contract
revenue
|
|
$
160,225
|
|
$
102,838
|
Recurring
royalties
|
|
3,597
|
|
2,741
|
Total
revenue
|
|
163,822
|
|
105,579
|
|
|
|
|
|
Cost of contract
revenue
|
|
122,778
|
|
79,363
|
Research and
development
|
|
3,374
|
|
3,168
|
Selling, general and
administrative
|
|
33,430
|
|
24,600
|
Restructuring and
other charges
|
|
2,159
|
|
2,600
|
Total operating
expenses
|
|
161,741
|
|
109,731
|
|
|
|
|
|
Income (loss) from
operations
|
|
2,081
|
|
(4,152)
|
|
|
|
|
|
Interest expense,
net
|
|
(12,830)
|
|
(7,136)
|
Other expense,
net
|
|
(793)
|
|
(997)
|
|
|
|
|
|
Loss before income
taxes
|
|
(11,542)
|
|
(12,285)
|
|
|
|
|
|
Income tax
benefit
|
|
(850)
|
|
(2,218)
|
|
|
|
|
|
Net loss
|
|
$
(10,692)
|
|
$
(10,067)
|
|
|
|
|
|
Basic and diluted loss
per share
|
|
$
(0.25)
|
|
$
(0.29)
|
|
|
|
|
|
Weighted avg. BASIC
shares outstanding
|
|
42,385
|
|
34,718
|
|
|
|
|
|
Weighted avg. DILUTED
shares outstanding
|
|
43,349
|
|
35,702
|
Table 1: Reconciliation of three months ended March 31, 2017 and 2016 contract gross profit and
contract gross margin to the non-GAAP financial measures of
contract gross profit and non-GAAP contract gross margin.
|
|
|
|
|
|
Non-GAAP
Measures
|
|
Three Months
Ended
|
(Dollars in
thousands)
|
|
March
31,
|
|
|
|
2017
|
|
2016
|
|
|
|
|
|
|
Consolidated Contract
Revenue, as reported
|
|
$
160,225
|
|
$
102,838
|
Consolidated Cost of
Contract Revenue, as reported
|
|
122,778
|
|
79,363
|
Consolidated Contract
Gross Profit, as reported
|
|
37,447
|
|
23,475
|
|
|
|
|
|
|
add:
|
Share-based
compensation expense
|
|
319
|
|
279
|
add:
|
Acquisition
accounting inventory adjustments
|
|
-
|
|
3,310
|
add:
|
Acquisition
accounting depreciation and amortization
|
|
5,486
|
|
700
|
Non-GAAP Consolidated
Contract Gross Profit
|
|
$
43,252
|
|
$
27,764
|
Consolidated Contract
Gross Margin, as reported
|
|
23.4%
|
|
22.8%
|
Non-GAAP Consolidated
Contract Gross Margin
|
|
27.0%
|
|
27.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
DDS Segment Contract
Revenue, as reported
|
|
$
29,167
|
|
$
23,536
|
DDS Segment Cost of
Contract Revenue, as reported
|
|
20,974
|
|
17,261
|
DDS Segment Contract
Gross Profit, as reported
|
|
8,193
|
|
6,275
|
|
|
|
|
|
|
add:
|
Share-based
compensation expense
|
|
135
|
|
134
|
add:
|
Acquisition
accounting depreciation
|
|
299
|
|
279
|
Non-GAAP DDS Segment
Contract Gross Profit
|
|
$
8,627
|
|
$
6,688
|
DDS Segment Contract
Gross Margin, as reported
|
|
28.1%
|
|
26.7%
|
Non-GAAP DDS Segment
Contract Gross Margin
|
|
29.6%
|
|
28.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
API Segment Contract
Revenue, as reported
|
|
$
103,364
|
|
$
54,369
|
API Segment Cost of
Contract Revenue, as reported
|
|
79,881
|
|
40,666
|
API Segment Contract
Gross Profit, as reported
|
|
23,483
|
|
13,703
|
|
|
|
|
|
|
add:
|
Share-based
compensation expense
|
|
113
|
|
91
|
add:
|
Acquisition
accounting inventory adjustments
|
|
-
|
|
3,310
|
add:
|
Acquisition
accounting depreciation and amortization
|
|
4,738
|
|
135
|
Non-GAAP API Segment
Contract Gross Profit
|
|
$
28,334
|
|
$
17,239
|
API Segment Contract
Gross Margin, as reported
|
|
22.7%
|
|
25.2%
|
Non-GAAP API Segment
Contract Gross Margin
|
|
27.4%
|
|
31.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
DP Segment Contract
Revenue, as reported
|
|
$
22,534
|
|
$
24,933
|
DP Segment Cost of
Contract Revenue, as reported
|
|
17,322
|
|
21,436
|
DP Segment Contract
Gross Profit, as reported
|
|
5,212
|
|
3,497
|
|
|
|
|
|
|
add:
|
Share-based
compensation expense
|
|
71
|
|
54
|
add:
|
Acquisition
accounting depreciation and amortization
|
|
262
|
|
286
|
Non-GAAP DP Segment
Contract Gross Profit
|
|
$
5,545
|
|
$
3,837
|
DP Segment Contract
Gross Margin, as reported
|
|
23.1%
|
|
14.0%
|
Non-GAAP DP Segment
Contract Gross Margin
|
|
24.6%
|
|
15.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
FC Segment Contract
Revenue, as reported
|
|
$
5,160
|
|
$
-
|
FC Segment Cost of
Contract Revenue, as reported
|
|
4,601
|
|
-
|
FC Segment Contract
Gross Profit, as reported
|
|
559
|
|
-
|
|
|
|
|
|
|
add:
|
Acquisition
accounting depreciation and amortization
|
|
187
|
|
-
|
Non-GAAP FC Segment
Contract Gross Profit
|
|
$
746
|
|
$
-
|
FC Segment Contract
Gross Margin, as reported
|
|
10.8%
|
|
-
|
Non-GAAP FC Segment
Contract Gross Margin
|
|
14.5%
|
|
-
|
Table 2: Reconciliation of select financial measures to non-GAAP
financial measures for the three months ended March 31, 2017 and 2016:
(Dollars in
thousands, except for per share data)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
March
31,
|
|
|
2017
|
|
2016
|
|
|
|
|
|
Consolidated net
loss, as reported
|
|
(10,692)
|
|
(10,067)
|
Acquisition
accounting depreciation and amortization
|
|
8,588
|
|
2,268
|
Non-cash interest and
amortization charges
|
|
5,063
|
|
2,772
|
Income tax effects of
Non-GAAP adjustments
|
|
(2,974)
|
|
(3,447)
|
Share-based
compensation expense
|
|
2,355
|
|
2,140
|
Restructuring and
other charges
|
|
2,159
|
|
1,458
|
Non-recurring
professional fees
|
|
840
|
|
-
|
Business acquisition
costs
|
|
264
|
|
2,174
|
ERP implementation
costs
|
|
141
|
|
623
|
Acquisition
accounting inventory adjustments
|
|
-
|
|
3,310
|
Acquisition
accounting depreciation adjustments in restructuring
|
|
-
|
|
1,142
|
Non-GAAP net
income
|
|
$
5,744
|
|
$
2,373
|
|
|
|
|
|
|
|
|
|
|
Consolidated Basic
loss per share, as reported
|
|
$
(0.25)
|
|
$
(0.29)
|
Effects of Non-GAAP
adjustments
|
|
0.39
|
|
0.36
|
Non-GAAP Basic
earnings per share
|
|
$
0.14
|
|
$
0.07
|
|
|
|
|
|
|
|
|
|
|
Consolidated Diluted
loss per share, as reported
|
|
$
(0.25)
|
|
$
(0.29)
|
Effects of Non-GAAP
adjustments
|
|
0.38
|
|
0.36
|
Non-GAAP Diluted
earnings per share
|
|
$
0.13
|
|
$
0.07
|
|
|
|
|
|
|
|
|
|
|
Consolidated Cost of
Contract Revenue, as reported
|
|
$
122,778
|
|
$
79,363
|
Acquisition
accounting depreciation and amortization
|
|
(5,486)
|
|
(700)
|
Share-based
compensation expense
|
|
(319)
|
|
(279)
|
Acquisition
accounting inventory adjustments
|
|
-
|
|
(3,310)
|
Non-GAAP Cost of
Contract Revenue
|
|
$
116,973
|
|
$
75,074
|
|
|
|
|
|
|
|
|
|
|
Consolidated Selling,
general and administrative, as reported
|
|
$
33,430
|
|
$
24,600
|
Acquisition
accounting depreciation and amortization
|
|
(3,102)
|
|
(1,568)
|
Share-based
compensation expense
|
|
(2,036)
|
|
(1,861)
|
Non-recurring
professional fees
|
|
(840)
|
|
-
|
Business acquisition
costs
|
|
(264)
|
|
(2,174)
|
ERP implementation
costs
|
|
(141)
|
|
(623)
|
Non-GAAP Selling,
general and administrative
|
|
$
27,047
|
|
$
18,374
|
|
|
|
|
|
|
|
|
|
|
Consolidated Interest
expense, as reported
|
|
$
12,830
|
|
$
7,136
|
Non-cash interest and
amortization charges
|
|
(5,063)
|
|
(1,142)
|
Non-GAAP Interest
expense
|
|
$
7,767
|
|
$
5,994
|
Table 3: Reconciliation of the three months ended March 31, 2017 and 2016 net loss to the non-GAAP
financial measure of adjusted EBITDA:
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
March
31,
|
|
|
2017
|
|
2016
|
Net loss, as
reported
|
|
$
(10,692)
|
|
$
(10,067)
|
Depreciation and
amortization
|
|
16,857
|
|
8,524
|
Interest expense,
net
|
|
12,830
|
|
7,136
|
Income tax
benefit
|
|
(850)
|
|
(2,218)
|
EBITDA
|
|
18,145
|
|
3,375
|
Share-based
compensation expense
|
|
2,355
|
|
2,140
|
Restructuring and
other charges
|
|
2,159
|
|
1,458
|
Non-recurring
professional fees
|
|
887
|
|
-
|
Business acquisition
costs
|
|
264
|
|
2,174
|
ERP Implementation
costs
|
|
141
|
|
623
|
Acquisition
accounting inventory adjustments
|
|
-
|
|
3,310
|
Adjusted
EBITDA
|
|
$
23,951
|
|
$
13,080
|
|
|
|
|
|
Adjusted EBITDA
Margin:
|
|
|
|
|
Adjusted EBITDA as a
percent of total revenue
|
|
15%
|
|
12%
|
Table 4: Reconciliation of forward-looking GAAP financial
measures to forward looking non-GAAP financial measures:
When planning, forecasting and analyzing future periods, the
Company does so primarily on a non-GAAP basis without preparing a
GAAP analysis as that would require estimates for various
reconciling items that would be difficult to predict with
reasonable accuracy. For example, it is difficult for the
Company to anticipate the need for, or magnitude of, any presently
unforeseen one-time restructuring expense or business acquisition
costs. As a result, the Company has prepared the below
reconciliation using estimates of reconciling items that are
currently expected to be excluded from the non-GAAP financial
measures in future periods. The Company is unable to include
all reconciling items at this time without unreasonable effort due
to the unavailability of the information needed to calculate
reconciling items and due to variability, complexity and limited
visibility to events or conditions in future periods.
|
|
|
|
Reconciliation of
GAAP net loss and GAAP diluted loss per share to non-GAAP net
income and non-GAAP diluted earnings per share (Dollars in
millions, except per share amounts)
|
|
Low
|
|
High
|
GAAP net
loss
|
$
(12)
|
|
$
(7)
|
Reconciling items
(a)
|
$
59
|
|
$
59
|
Non-GAAP net
income
|
$
47
|
|
$
52
|
|
|
|
|
GAAP diluted loss per
share
|
$
(0.28)
|
|
$
(0.16)
|
Non-GAAP diluted
earnings per share
|
$
1.08
|
|
$
1.20
|
|
|
|
|
(a) Reconciling items
primarily include restructuring costs, acquisition accounting
depreciation and amortization, share-based compensation, non-cash
debt interest and amortization charges and the tax effect for such
items.
|
|
|
|
|
|
|
|
|
Reconciliation of
GAAP net loss to Adjusted EBITDA (Dollars in
millions)
|
|
Low
|
|
High
|
GAAP net
loss
|
$
(12)
|
|
$
(7)
|
Income tax (benefit)
expense
|
$
12
|
|
$
13
|
Interest expense,
net
|
$
48
|
|
$
48
|
Depreciation and
amortization
|
$
62
|
|
$
66
|
EBITDA
|
$
110
|
|
$
121
|
Reconciling items
(b)
|
$
24
|
|
$
24
|
Adjusted
EBITDA
|
$
135
|
|
$
145
|
|
|
|
|
(b) Reconciling items
primarily include restructuring costs, share-based compensation
charges and the tax effect of all non-gaap reconciling
items.
|
|
|
|
|
Reconciliation of
GAAP contract gross margin to non-GAAP contract gross
margin
|
|
|
|
|
GAAP contract gross
margin
|
26%
|
|
|
Add: acquisition
accounting depreciation and share-based compensation
|
3%
|
|
|
Non-GAAP contract
gross margin
|
29%
|
|
|
|
|
|
|
Reconciliation of
GAAP SG&A as a percentage of contract revenue to non-GAAP
SG&A as a percentage of contract revenue
|
|
|
|
|
GAAP Selling, General
and Administrative Expense
|
18%
|
|
|
Reconciling items
(c)
|
(3%)
|
|
|
Non-GAAP Selling,
General, and Administrative Expense
|
15%
|
|
|
|
|
|
|
(c) Reconciling items
primarily include acquisition accounting depreciation and
amortization and share-based compensation.
|
Table 5: Reconciliation of non-GAAP organic revenue for the
three months ended March 31, 2017 and
2016:
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
|
March
31,
|
|
|
|
|
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
Consolidated Contract
Revenue, as reported
|
|
$
160,225
|
|
$
102,838
|
Less: Euticals
contract revenue
|
|
|
(49,976)
|
|
-
|
Non-GAAP: Organic
Consolidated Contract Revenue
|
$
110,249
|
|
$
102,838
|
Non-GAAP: Organic
Consolidated Contract Revenue Growth
|
7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
API Contract Revenue,
as reported
|
|
|
$
103,363
|
|
$
54,369
|
Less: Euticals API
contract revenue
|
|
|
(43,412)
|
|
-
|
Non-GAAP: Organic API
Contract Revenue
|
|
$
59,951
|
|
$
54,369
|
Non-GAAP: Organic API
Contract Revenue Growth
|
10%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DDS Contract Revenue,
as reported
|
|
|
$
29,166
|
|
$
23,536
|
Less: Euticals DDS
contract revenue
|
|
|
(1,404)
|
|
-
|
Non-GAAP: Organic DDS
Contract Revenue
|
|
$
27,762
|
|
$
23,536
|
Non-GAAP: Organic DDS
Contract Revenue Growth
|
18%
|
|
|