Emergent BioSolutions Inc. (NYSE:EBS) today announced preliminary
unaudited 2017 financial results and guidance for 2018.
Daniel J. Abdun-Nabi, president and chief executive officer of
Emergent BioSolutions, said, “Our exceptional financial and
operational performance in 2017 builds upon Emergent’s history of
growth and innovation, and demonstrates our ability to execute on a
focused strategy that leverages our proven core competencies. We
are excited about this momentum as we enter 2018, our 20th year in
business, well-positioned for continued growth in pursuit of our
2020 growth plan goals.”
PRELIMINARY FULL YEAR 2017 FINANCIAL RESULTS
(Unaudited)
(in millions) |
PRELIMINARY (As of 1/8/2018) |
Previous Guidance (As of 11/2/2017) |
Total Revenues |
$555 to $560 |
$540
to $560 |
BioThrax® |
~$286 |
$280
to $290 |
Pre-Tax Income |
$113 to $117 |
NA |
Net Income (1) |
$80 to $84 |
$70 to
$80 |
Adjusted Net Income (1)
(2) |
$92 to $96 |
$85 to
$95 |
EBITDA (2) |
$160 to $164 |
$150
to $160 |
Cash |
~$180 |
NA |
(1) Reflects an estimated effective tax rate that includes the
expected effects of the United States Tax Cuts and Jobs Act of 2017
on the company’s 2017 income tax provision.(2) See “Reconciliation
of Net Income to Adjusted Net Income and EBITDA” for a definition
of terms and a reconciliation table.
Total RevenueFor the full year 2017, the
company anticipates total revenue of $555 to $560 million, the
midpoint of which represents a $69 million or 14% increase from
2016. This increase is due primarily to higher BioThrax® (Anthrax
Vaccine Adsorbed) sales of approximately $286 million versus $237
million in 2016, as well as higher Other Product sales and CMO
revenue, offset by lower Contract & Grant revenue.
Net Income (GAAP and Adjusted)For the full year
2017, the company anticipates net income of $80 to $84 million, the
midpoint of which represents a $20 million or 32% increase from
2016. Full year 2017 adjusted net income is anticipated to be $92
to $96 million, the midpoint of which represents a $17 million or
22% increase from 2016 (see “Reconciliation of Net Income to
Adjusted Net Income and EBITDA” for a definition of terms and a
reconciliation table). The year-over-year increase reflects the
impact of higher product sales and CMO services revenue, lower
R&D and SG&A costs, and the positive impact of a lower
estimated effective tax rate due largely to the absence in 2017 of
certain 2016 items attributable to the August 2016 spin-off of
Aptevo Therapeutics that negatively impacted the 2016 tax
provision.
Cash and Cash EquivalentsFor the full year
2017, the company anticipates cash and cash equivalents at year end
of approximately $180 million, reflecting the impact of the
following that occurred during the fourth quarter of 2017:
- the closing of the acquisitions of ACAM2000®, (Smallpox
(Vaccinia) Vaccine, Live) and raxibacumab; and
- the purchase of shares of the company’s common equity pursuant
to the company’s share buyback program.
NoteThe preliminary 2017 financial results are
subject to revision and will be finalized upon completion of the
company’s external audit, which is anticipated in late February
2018. Once the external audit is completed, the company may report
financial results that could differ, and the differences could be
material.
2018 FINANCIAL OUTLOOK
(in millions) |
Full Year 2018 (Forecast as of 1/8/2018) |
Total Revenues |
$715 to $755 |
Pre-Tax Income |
$120 to $140 |
Net Income (1) |
$95 to $110 |
Adjusted Net Income (1)
(2) |
$110 to $125 |
EBITDA (2) |
$175 to $190 |
(1) Reflects an estimated effective tax rate that includes the
expected effects of the United States Tax Cuts and Jobs Act of 2017
on the company’s 2018 income tax provision.(2) See “Reconciliation
of Net Income to Adjusted Net Income and EBITDA” for a definition
of terms and a reconciliation table.
For the full year of 2018, the company outlook includes the
impact of the following items:
- continued deliveries of BioThrax to the Strategic National
Stockpile (SNS) under our follow-on procurement contract with the
Centers for Disease Control and Prevention (CDC);
- deliveries of ACAM2000 to the SNS under the CDC procurement
contract;
- deliveries of raxibacumab to the SNS under the procurement
contract with the Biomedical Advanced Research and Development
Authority (BARDA);
- domestic and international sales of the other medical
countermeasures that comprise Other Product sales;
- continued expansion of our CMO services business unit;
- increased Contract & Grant revenue due to anticipated
increased work related to development projects funded by the U.S.
government;
- increased investment in discretionary, development projects
funded by the company targeting opportunities in medical
countermeasures for emerging infectious diseases; and
- anticipated reduced tax rate resulting from revisions to U.S.
corporate tax laws.
The outlook for 2018 does not include estimates for potential
new corporate development or other M&A transactions.
Q1 2018For the first quarter of 2018, the
company anticipates total revenues of $145 to $160 million.
RECONCILIATION OF 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 Securities and
Exchange Commission rules and regulations. These non-GAAP financial
measures should be considered supplemental to and not a substitute
for financial information prepared in accordance with generally
accepted accounting principles. The company’s definition of these
non-GAAP measures may differ from similarly titled measures used by
others. Adjusted Net Income 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
($ in
millions) |
Twelve Months Ended December 31, |
2018 (Forecast) |
2017 (Estimated) |
2016 (Actual) |
Source |
Net
Income |
$95.0 to $110.0 |
$80.0 to $84.0 |
$62.5 |
NA |
Adjustments: |
+
Acquisition-related costs (transaction & integration) |
3.0 |
6.0 |
1.7 |
SG&A |
+
Non-cash amortization charges |
16.0 |
9.0 |
8.4 |
COGS,
SG&A, Other Income |
+
Impact of purchase accounting on inventory step-up |
-- |
3.0 |
1.1 |
COGS |
+
Restructuring and other |
-- |
1.0 |
11.7 |
SG&A |
Tax
effect |
(4.0) |
(7.0) |
(8.0) |
NA |
Total Adjustments |
15.0 |
12.0 |
15.0 |
NA |
Adjusted Net
Income |
$110.0 to $125.0 |
$92.0 to $96.0 |
$77.5 |
NA |
|
|
|
|
|
Reconciliation of Net Income to EBITDA
($ in
millions) |
Twelve Months Ended December 31, |
2018 (Forecast) |
2017 (Estimated) |
2016 (Actual) |
Source |
Net
Income |
$95.0 to $110.0 |
$80.0 to $84.0 |
$62.5 |
NA |
Adjustments: |
+
Depreciation & Amortization |
50.0 |
40.0 |
34.9 |
COGS, SG&A,
R&D |
+
Provision for Income Taxes |
29.0 |
33.0 |
36.7 |
Income Taxes |
+
Total Interest Expense |
1.0 |
7.0 |
7.6 |
Other Income |
Total Adjustments |
80.0 |
80.0 |
79.2 |
NA |
EBITDA |
$175.0 to $190.0 |
$160.0 to $164.0 |
$141.7 |
NA |
|
|
|
|
|
Presentation WebcastThe company will provide an
update on the current business and discuss preliminary 2017
financial results, the forecast and corporate goals for 2018, and
long-term goals for 2020 during its presentation at the 36th Annual
J.P. Morgan Healthcare Conference on January 9, 2018.
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 BIOSOLUTIONS INC.Emergent
BioSolutions is a global life sciences company seeking to protect
and enhance life by focusing on providing specialty products for
civilian and military populations that address accidental,
intentional, and naturally occurring public health threats. 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 on Twitter
@emergentbiosolu and Instagram @life_at_emergent.
SAFE HARBOR STATEMENTThis 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 preliminary full year 2017 results, 2018 financial
outlook, 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, strategic
goals, growth strategy, international market expansion, acquisition
strategy, product sales, government development or procurement
contracts or awards, government appropriations, manufacturing
capabilities, product development timeline, Emergency Use
Authorization (EUA) and the timing of other 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. 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 the completion of the
company’s external audit of 2017 financial results, the
availability of funding and the exercise of options under our
BioThrax and NuThrax contracts; appropriations for the procurement
of our products; 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;
availability of funding for our U.S. government grants and
contracts; our ability to identify and acquire or in-license
products or product candidates that satisfy our selection criteria;
our ability to successfully integrate and develop the products or
product candidates, programs, operations and personnel of any
entities, businesses or products that we acquire, including our
recently completed acquisitions of the ACAM2000 business from
Sanofi and raxibacumab from GSK and the timing and receipt of
required FDA approvals for actions contemplated in connection with
our integration of these products; 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 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
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 and Exchange Commission, when evaluating our
forward-looking statements.
Investor ContactRobert BurrowsVice President,
Investor Relations(o) 240.631.3280; (m)
240.413.1917burrowsr@ebsi.com
Media ContactLynn KiefferVice President,
Corporate Communications(o) 240.631.3391kiefferl@ebsi.com
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