- Reaffirms 2021 Full Year Forecast for Revenues and Profit
“Our second quarter performance demonstrates the strength of our strategy and diversified business model,” said
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 | 1% | ||||
Net income | (95)% | ||||
Net income per diluted share | (95)% | ||||
Adjusted net income (2) | (83)% | ||||
Adjusted net income (2) per diluted share | (83)% | ||||
Adjusted EBITDA (2) | (68)% |
($ in millions, except per share amounts) | YTD 2021 | YTD 2020 | % Change | ||
Total revenues | 26% | ||||
Net income | (7)% | ||||
Net income per diluted share | (9)% | ||||
Adjusted net income (2) | (4)% | ||||
Adjusted net income (2) per diluted share | (6)% | ||||
Adjusted EBITDA (2) | 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 theDepartment of Health and Human Services (HHS) valued at approximately$182 million and$56 million to deliver ACAM2000® (Smallpox (Vaccinia) Vaccine, Live) and VIGIV [Vaccinia Immune Globulin Intravenous (Human)] (VIGIV), respectively.
- Supporting the Canadian government’s anthrax preparedness efforts under a new contract with the Public Health Agency Canada (PHAC) to deliver Anthrasil® (Anthrax Immune Globulin Intravenous [human]) through
March 2023 .
- Received approval from the
Federal Agency for Medicines andHealth Products (FAMHP) ofBelgium for Trobigard® Auto-injector (atropine sulfate 2mg/obidoxime chloride 220mg; solution for injection), an emergency treatment product for known or suspected exposure to nerve agents or toxic organophosphates in adults over 18 years of age.
2021 FINANCIAL PERFORMANCE (1)
(I) Quarter Ended
Revenues
($ in millions) | Q2 2021 | Q2 2020 | % Change | |
Product sales, net (3): | ||||
| 46% | |||
| (61)% | |||
| $— | (100)% | ||
| —% | |||
Total product sales, net | (39)% | |||
Contract development and manufacturing (CDMO) services | * | |||
Contracts and grants | 8% | |||
Total revenues | 1% | |||
* % change is greater than 100% |
Product Sales, net
NARCAN Nasal Spray
For Q2 2021, revenues from NARCAN® (naloxone HCI) Nasal Spray increased
Anthrax vaccines
For Q2 2021, revenues from Anthrax vaccines decreased
ACAM2000
For Q2 2021, revenues from ACAM2000 decreased
Other (4)
For Q2 2021, revenues from other product sales were consistent as compared to Q2 2020.
For Q2 2021, revenue from contract development and manufacturing services increased
Contracts and Grants
For Q2 2021, revenues from contracts and grants were consistent as compared to Q2 2020.
Operating Expenses
($ in millions) | Q2 2021 | Q2 2020 | % Change | ||
Cost of product sales and CDMO services | 76% | ||||
Research and development | 2% | ||||
Selling, general and administrative | 20% | ||||
Amortization of intangible assets | 1% |
Cost of Product Sales and CDMO Services
For Q2 2021, cost of product sales and contract development and manufacturing services increased
Research and Development
For Q2 2021, research and development expenses were consistent as compared to Q2 2020.
Selling, General and Administrative
For Q2 2021, selling, general and administrative expenses increased
Additional Financial Information
Gross Margin (2)
($ in millions) | Q2 2021 | Q2 2020 | % Change |
Gross margin | (40)% | ||
Gross margin % (gross margin divided by adjusted revenues (2)) | 39% | 65% | (26)% |
For Q2 2021, gross margin decreased
CDMO Metrics
CDMO Backlog Rollforward | ($ in millions) |
Beginning backlog (3/31/2021) (5) | |
Revenue recognized during Q2 2021 | ( |
New Business - Initial value of contracts secured during Q2 2021 (6) | |
New Business - Incremental value of existing contracts modified during Q2 2021 (6) | ( |
Ending backlog (6/30/2021) (5) |
($ in millions) | % Change | ||||
CDMO services backlog (5) | (18)% | ||||
CDMO services opportunity funnel (7) | (17)% |
For Q2 2021, CDMO services backlog decreased
For Q2 2021, CDMO services opportunity funnel decreased
Capital Expenditures
($ in millions) | Q2 2021 | Q2 2020 | % Change |
Gross capital expenditures | 91% | ||
- Capital expenditures reimbursed | $— | —% | |
Net capital expenditures | 58% | ||
Gross capital expenditures as a % of total revenues | 17% | 9% | 8% |
Net capital expenditures as a % of total revenues | 14% | 9% | 5% |
For Q2 2021, capital expenditures increased largely due to the Company's continued investments associated with increased capacity and capabilities at the Company's
2021 FINANCIAL FORECAST
For full year 2021, the Company's forecast includes the following financial metrics:
($ in millions) | 2021 Forecast | |
Total revenues | Reaffirmed | |
| Reaffirmed | |
| Reaffirmed | |
| Reaffirmed | |
| Reaffirmed | |
Adjusted EBITDA (2) | Reaffirmed | |
Adjusted net income (2) | 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 inJuly 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
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
(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
Live Teleconference Information: Dial in: [US] (855) 766-6521; [International] (262) 912-6157 Conference 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
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
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
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
Investor Contact Vice President, Investor Relations burrowsr@ebsi.com (240) 413-1917 | Media Contact Director, Media Relations mediarelations@ebsi.com (240) 760-0551 |
Condensed Consolidated Balance Sheets | |||||||
(unaudited, in millions, except per share data) | |||||||
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 | |||||
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, | — | — | |||||
Common stock, | 0.1 | 0.1 | |||||
Additional paid-in capital | 804.4 | 784.9 | |||||
(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 |
Condensed Consolidated Statements of Operations | ||||||||||||
(unaudited, in millions, except per share data) | ||||||||||||
Three Months Ended | Six Months Ended | |||||||||||
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. | ||||||||||||
Condensed Consolidated Statements of Cash Flows
(unaudited, in millions)
Six Months Ended | |||||||
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 | |||
($ in millions, except per share value) | 2021 | 2020 | Source |
Net income | |||
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: | |||
Adjusted net income | |||
Adjusted net income per diluted share |
Six Months Ended | |||
($ in millions, except per share value) | 2021 | 2020 | Source |
Net income | |||
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: | |||
Adjusted net income | |||
Adjusted net income per diluted share |
($ in millions) | Reaffirmed 2021 Full Year Forecast | Source |
Net income | ||
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: | ||
Adjusted net income |
Reconciliation of Net Income to Adjusted EBITDA (1)
Three Months Ended | ||
($ in millions) | 2021 | 2020 |
Net income | ||
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 | ||
Adjusted EBITDA |
Six Months Ended | ||
($ in millions) | 2021 | 2020 |
Net income | ||
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 | ||
Adjusted EBITDA |
($ in millions) | Reaffirmed 2021 Full Year Forecast |
Net income | |
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 | |
Adjusted EBITDA |
Reconciliation of Gross Margin (1)
Three Months Ended | ||
($ in millions) | 2021 | 2020 |
Total revenues | ||
- Contract and grants revenues | (25.4) | (23.6) |
Adjusted revenues | ||
Cost of product sales and contract development and manufacturing services ("COGS") | ||
Gross margin (adjusted revenues minus COGS) | ||
Gross margin % (gross margin divided by adjusted revenues) | 39% | 65% |
Six Months Ended | ||
($ in millions) | 2021 | 2020 |
Total revenues | ||
- Contract and grants revenues | (46.7) | (46.2) |
Adjusted revenues | ||
Cost of product sales and contract development and manufacturing services ("COGS") | ||
Gross margin (adjusted revenues minus COGS) | ||
Gross margin % (gross margin divided by adjusted revenues) | 53% | 62% |
Reconciliation of
Three Months Ended | ||
($ in millions) | 2021 | 2020 |
Research and Development Expenses | ||
Adjustments: | ||
- Contracts and Grants Revenue | (25.4) | (23.6) |
23.5 | ||
Adjusted Revenue (Total Revenue less Contracts and Grants Revenue) | 372.1 | |
Net R&D as % of Adjusted Revenue (Net R&D Margin) | 6% | 7% |
Six Months Ended | ||
($ in millions) | 2021 | 2020 |
Research and Development Expenses | ||
Adjustments: | ||
- Contracts and Grants Revenue | (46.7) | (46.2) |
54.7 | ||
Adjusted Revenue (Total Revenue less Contracts and Grants Revenue) | 693.8 | |
Net R&D as % of Adjusted Revenue (Net R&D Margin) | 8% | 8% |
Source:
2021 GlobeNewswire, Inc., source