Emergent BioSolutions Inc. (NYSE: EBS) today
announced selected preliminary unaudited 2018 financial results and
its financial forecast for 2019.
Daniel J. Abdun-Nabi, chief executive officer of Emergent
BioSolutions, said, “Our preliminary results for 2018 reflect
another year of strong financial and operational performance as we
continue to execute our strategy. As we enter 2019, we anticipate
revenues topping $1 billion for the first time in our corporate
history driven by solid organic growth in each of our business
units together with contributions from the products that we
acquired in 2018. Importantly, we also anticipate significant
growth in each of our profitability metrics while simultaneously
expanding our portfolio of advanced stage product candidates that
address serious global public health threats. We remain steadfast
in our commitment to enable governments and commercial customers
worldwide to address their public health threat preparedness and
response needs as we further our mission of protecting and
enhancing life.”
PRELIMINARY 2018 FINANCIAL RESULTS
(Unaudited)
The company is providing the following preliminary, unaudited
financial results for full year 2018.
(in millions) |
PRELIMINARY RESULTS (As of
1/7/2019) |
Previous Forecast (As of 11/1/2018) |
Total
Revenues |
$779 -- $784 |
$770
-- $800 |
Pretax
Income |
$79 -- $83 |
$75 --
$90 |
Net
Income (1) |
$60 -- $64 |
$60 --
$70 |
Adjusted Net
Income (1) |
$117 -- $121 |
$105
-- $115 |
EBITDA
(1) |
$152 -- $156 |
$155
-- $165 |
Adjusted
EBITDA (1) |
$198 -- $202 |
$190
-- $200 |
- See “Reconciliation of Net Income to Adjusted Net Income,
EBITDA and Adjusted EBITDA” for a definition of terms and a
reconciliation table.
Total RevenueFor the full year 2018, the
company anticipates total revenue of $779 to $784 million, the
midpoint of which represents a $221 million or 39% increase from
2017. This annual increase is due primarily to the contribution of
sales of ACAM2000®, (Smallpox (Vaccinia) Vaccine, Live),
raxibacumab and NARCAN® (naloxone HCl) Nasal Spray in 2018 as well
as higher CMO revenue, offset by lower BioThrax® (Anthrax Vaccine
Adsorbed) revenue.
Net Income (GAAP and Adjusted)For the full year
2018, the company anticipates net income of $60 to $64 million and
adjusted net income of $117 to $121 million. The midpoint of the
adjusted net income range represents a $23 million or 24% increase
from 2017 and reflects the impact of higher product sales and CMO
services revenue as well as the positive impact of a lower
estimated effective tax rate. (See “Reconciliation of Net Income to
Adjusted Net Income and EBITDA” for a definition of terms and a
reconciliation table.)
NoteThe preliminary 2018 financial
results are subject to revision and will be finalized upon
completion of the company’s external audit, which is anticipated in
late February 2019. Once the external audit is completed, the
company may report financial results that could differ, and the
differences could be material.
2019 FINANCIAL FORECAST
(in millions) |
FULL YEAR 2019 (As of
1/7/2019) |
Total
Revenues |
$1,060 -- $1,140 |
Net
Income (1) |
$80 -- $110 |
Adjusted Net
Income (1) |
$150 -- $180 |
EBITDA
(1) |
$255 -- $285 |
Adjusted
EBITDA (1) |
$280 -- $310 |
- See “Reconciliation of Net Income to Adjusted Net Income,
EBITDA and Adjusted EBITDA” for a definition of terms and a
reconciliation table.
For the full year of 2019, the company’s financial forecast
includes the impact of the following items:
- continued deliveries of BioThrax to the Strategic National
Stockpile (SNS) under the current procurement contract with the
Centers for Disease Control and Prevention (CDC), (the contract and
the SNS are now managed by the Office of the Assistant Secretary
for Preparedness and Response (ASPR));
- initial deliveries of NuThrax™ (anthrax vaccine adsorbed with
CPG 7909 adjuvant) to the SNS following expected Emergency Use
Authorization pre-approval by the U.S. Food and Drug Administration
(FDA) under the company’s current development and procurement
contract with the Biomedical Advanced Research and Development
Authority (BARDA);
- full year sales of NARCAN Nasal Spray, Vaxchora® (Cholera
Vaccine, Live, Oral), and Vivotif® (Typhoid Vaccine Live Oral
Ty21a), all of which were acquired in the fourth quarter of
2018;
- deliveries of ACAM2000 to the SNS under the anticipated
follow-on procurement contract with the ASPR;
- deliveries of raxibacumab to the SNS under the current
procurement contract with BARDA;
- domestic and international sales of the other medical
countermeasures that comprise Other Product sales;
- continued CDMO services revenue;
- increased Contract & Grant revenue due to anticipated
increased work related to development projects funded by third
parties; and
- continued investment in discretionary development projects
funded by the company targeting opportunities in medical
countermeasures for emerging infectious diseases and other public
health threats.
The outlook for 2019 does not include estimates for potential
new corporate development or other M&A transactions.
Q1 2019 REVENUE FORECASTFor the first quarter
of 2019, the company anticipates total revenues of $185 to $205
million.
PRESENTATION WEBCASTThe company will provide an
update on the current business and discuss preliminary 2018
financial results, the forecast and corporate goals for 2019, and
long-term goals for 2020 during its presentation at the 37th Annual
J.P. Morgan Healthcare Conference on January 8, 2019 at 11:00 AM
Pacific time.
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.
RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME,
EBITDA AND ADJUSTED EBITDA
This press release contains two financial measures
(Adjusted Net Income and EBITDA (Earnings Before Interest,
Taxes, Depreciation and Amortization), and Adjusted
EBITDA) 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 (which are all tax effected
utilizing the statutory tax rate for the US). EBITDA reflects net
income excluding the impact of depreciation, amortization, interest
expense and provision for income taxes. Adjusted EBITDA also
excludes specified items that can be highly variable and the
non-cash impact of certain purchase accounting adjustments (which
are all tax effected utilizing the statutory tax rate for the US).
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
(Unaudited)
($ in
millions) |
Twelve Months Ended December 31, |
2019 (Forecast) |
2018 (Estimated) |
2017 (Actual) |
Source |
Net
Income |
$80.0 to $110.0 |
$60.0 to $64.0 |
$ |
82.6 |
|
NA |
Adjustments: |
+
Acquisition-related costs (transaction & integration) |
14.0 |
|
25.0 |
|
|
5.6 |
|
SG&A |
+
Non-cash amortization charges |
64.0 |
|
26.0 |
|
|
10.3 |
|
COGS,
SG&A, Other Income |
+
Impact of purchase accounting on inventory step-up |
7.0 |
|
18.0 |
|
|
2.6 |
|
COGS |
+
Exit and disposal costs |
4.0 |
|
3.0 |
|
|
1.5 |
|
SG&A |
Tax
effect |
(19.0 |
) |
(15.0 |
) |
|
(7.0 |
) |
NA |
Total Adjustments |
70.0 |
|
57.0 |
|
|
13.1 |
|
NA |
Adjusted Net
Income |
$150.0 to $180.0 |
$117.0 to $121.0 |
$ |
95.7 |
|
NA |
Reconciliation of Net Income to EBITDA and Adjusted
EBITDA (Unaudited)
($ in
millions) |
Twelve Months Ended December 31, |
2019 (Forecast) |
2018 (Estimated) |
2017 (Actual) |
Source |
Net
Income |
$80.0 to
$110.0 |
$60.0 to
$64.0 |
$ |
82.6 |
NA |
Adjustments: |
+
Depreciation & Amortization |
106.0 |
65.0 |
|
40.8 |
COGS,
SG&A, R&D |
+
Provision for Income Taxes |
30.0 |
18.0 |
|
36.0 |
Income
Taxes |
+
Total Interest Expense |
39.0 |
9.0 |
|
6.6 |
Other
Expense/(Income) |
Total Adjustments |
175.0 |
92.0 |
|
83.4 |
NA |
EBITDA |
$255.0 to $285.0 |
$152.0 to $156.0 |
$ |
166.0 |
NA |
Additional Adjustments: |
+
Acquisition-related costs (transaction & integration) |
14.0 |
25.0 |
|
5.6 |
SG&A |
+
Exit and disposal costs |
4.0 |
3.0 |
|
1.5 |
SG&A |
+
Impact of purchase accounting on inventory step-up |
7.0 |
18.0 |
|
2.6 |
COGS |
Total Additional Adjustments |
25.0 |
46.0 |
|
9.7 |
NA |
Adjusted
EBITDA |
$280.0 to $310.0 |
$198.0 to $202.0 |
$ |
175.7 |
NA |
ABOUT EMERGENT BIOSOLUTIONS INC.
Emergent BioSolutions Inc. 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, deliberate, and naturally occurring public
health threats. We aspire to be a Fortune 500 company recognized
for protecting and enhancing life, driving innovation, and living
our values. Additional information about the company may be found
at www.emergentbiosolutions.com. Find us on LinkedIn and follow us
on Twitter @emergentbiosolu and Instagram @life_at_emergent.
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, and statements
regarding the expected financial implications of our acquisitions
of PaxVax and Adapt 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, product
sales, government development or procurement contracts or awards,
including entering into a follow-on procurement contract related to
ACAM2000, organic business growth, profitability increases, product
portfolio expansion, future deliveries of BioThrax® (Anthrax
Vaccine Adsorbed), Emergency Use Authorization (EUA) approval and
commencement of deliveries of NuThrax™ (anthrax vaccine adsorbed
with CPG 7909 adjuvant), and future deliveries of raxibacumab.
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 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-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 successfully
integrate and develop the operations, products, product candidates,
programs, and personnel from our recently completed acquisitions of
PaxVax and Adapt; our ability and the ability of our collaborators
to protect our intellectual property rights; whether anticipated
synergies and benefits from an acquisition or in-license will be
realized within expected time periods, if at all; our ability to
utilize our manufacturing facilities and expand our capabilities;
our ability to accurately forecast demand for our products and our
suppliers to maintain an adequate supply of the materials needed to
produce them; our ability and the ability of our contractors and
suppliers to maintain compliance with current Good Manufacturing
Practices and other regulatory obligations; the timing and results
of clinical trials; 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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