Emergent BioSolutions Announces Preliminary 2015 Financial Results, Provides 2016 Financial Outlook, And Outlines New Five-Year (2016-2020) Strategic Growth Plan
- 2015 Preliminary Estimates:
- Total revenues of $520 to $525 million, a 16% increase over 2014 (at midpoint)
- GAAP net income of $60 to $64 million, a 69% increase over 2014 (at midpoint)
- Adjusted net income of $73 to $77 million, a 38% increase over 2014 (at midpoint)
- EBITDA of $130 to $134 million, a 43% increase over 2014 (at midpoint)
- Year-end cash of approximately $310 million
- 2016 Forecast:
- Total revenues of $600 to $630 million
- GAAP net income of $75 to $85 million
- Adjusted net income of $90 to $100 million
- EBITDA of $150 to $160 million
- 2020 Key Financial and Operational Goals:
- Annual revenue of $1B
- >10% of revenue from ex-US markets
- Net income CAGR of >20%
- Six products in clinical or advanced development, with at least three being dual use, prioritizing those with third party funding
GAITHERSBURG, Md., Jan. 11, 2016 (GLOBE NEWSWIRE) -- Emergent BioSolutions Inc. (NYSE:EBS) today announced preliminary unaudited 2015 financial results and provided guidance for 2016. The company also provided an overview of the key financial and operational goals to be achieved by year end 2020 through its next five-year strategic growth plan.
Daniel J. Abdun-Nabi, president and CEO of Emergent BioSolutions, said, “Having successfully implemented our 2012-2015 growth plan and delivered financial results in excess of our expectations, we are well-positioned for continued success and growth. Looking ahead we will remain focused on addressing the growing public health threats market and will build on our momentum to achieve our newly established 2020 goals of $1B in revenue, generating more than 10% of our revenue from ex-US markets, six products in clinical or advanced development with a focus on products supported by third party funding, and a five-year net income CAGR of >20%. We continue to strive toward our vision of protecting and enhancing 50 million lives by 2025.”
(I) Preliminary Full Year 2015 Results (unaudited)
Revenue
For full year 2015, the company anticipates total revenues of $520 to $525 million, the midpoint of which represents a 16% increase over 2014. This growth is driven by continued robust BioThrax sales, accounting for approximately $294 million.
Net Income (GAAP and Non-GAAP)
For full year 2015, the company anticipates GAAP net income of $60 to $64 million, or $1.27 to $1.35 per diluted share, the midpoint of which represents a 69% increase over 2014. On a non-GAAP basis, the company anticipates full year 2015 adjusted net income of $73 to $77 million, or $1.54 to $1.63 per diluted share, the midpoint of which represents a 38% increase over 2014 (see “Reconciliation of GAAP Net Income to Adjusted Net Income and EBITDA” for a definition of terms and a reconciliation table). This growth reflects the continued strength and contribution from BioThrax sales as well as ongoing initiatives to control spending and increase operating efficiencies across the Biodefense and Biosciences divisions.
Cash and Cash Equivalents
For the full year 2015, the company anticipates cash and cash equivalents at year end of approximately $310 million.
Note
The preliminary 2015 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 2016. Once the external audit is completed, the company may report financial results that could differ, and the differences could be material.
(II) 2016 Financial Outlook
Full Year 2016
For the full year of 2016, the company forecasts total revenues of $600 to $630 million, driven by growth in BioThrax sales which are anticipated to be between $305 to $320 million, continued domestic and international sales of the other Biodefense division products, and continued robust development funding through contracts and grants revenues. The company also forecasts full year 2016 GAAP net income of $75 to $85 million, non-GAAP adjusted net income of $90 to $100 million, and EBITDA of $150 to $160 million (see “Reconciliation of GAAP Net Income to Adjusted Net Income and EBITDA” for a definition of terms and a reconciliation table).
The company’s outlook for 2016 includes the impact of a successful spin-off of Aptevo Therapeutics in mid-2016 and continuous delivery of BioThrax to the CDC under an anticipated follow-on, multi-year procurement contract, but does not include any estimates for BioThrax deliveries from Building 55, the company’s large scale BioThrax manufacturing facility, or any estimates for potential new corporate development or other M&A transactions.
Q1 2016
For the first quarter of 2016, the company anticipates total revenues of $105 to $120 million.
(III) 2016-2020 Strategic Growth Plan
The company announced today a growth plan that is intended to advance its mission by expanding and diversifying its business as measured by achieving the following goals by December 31, 2020:
- Annual revenue of $1B
- >10% of revenue from ex-US markets
- Net income CAGR (2016-2020) of >20%
- Six products in clinical or advanced development, with at least three being dual use and prioritizing those with third party funding.
To achieve the goals of the growth plan, the company intends to leverage its core competencies in government relations, medical countermeasure development, quality manufacturing, strategic acquisitions, and financial discipline to execute on the following key strategies:
- Expanding its leadership positions in the public health threats market
- Developing innovative products in partnership with governments and NGOs
- Growing through revenue generating and accretive business and product acquisitions
- Delivering attractive net income growth
- Enhancing culture to create a sustainable competitive advantage
(IV) 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 Securities & 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 GAAP Net Income to Adjusted Net Income
| ($ in millions) | Twelve Months Ended December 31, | |||||||||||||
| 2016 (Forecast) | 2015 (Estimated) | 2014 (Actual) | Source | |||||||||||
| GAAP Net Income | $75.0 to $85.0 | $60.0 to $64.0 | $ | 36.7 | NA | |||||||||
| Adjustments: | ||||||||||||||
| Acquisition-related costs (transaction & integration) | 9.0 | 6.0 | 8.1 | SG&A | ||||||||||
| Non-cash amortization charges | 10.0 | 11.0 | 9.5 | COGS, SG&A, Other Income | ||||||||||
| Write-off of syndicated loans | -- | -- | 1.8 | Other Income | ||||||||||
| Impact of purchase accounting on inventory step-up | 2.0 | 1.0 | 3.0 | COGS | ||||||||||
| Restructuring and other | -- | 1.0 | 2.6 | SG&A | ||||||||||
| Tax effect | (6.0 | ) | (6.0 | ) | (7.5 | ) | NA | |||||||
| Total Adjustments | 15.0 | 13.0 | 17.5 | NA | ||||||||||
| Adjusted Net Income | $90.0 to $100.0 | $73.0 to $77.0 | $ | 54.2 | NA | |||||||||
Reconciliation of GAAP Net Income to EBITDA
| ($ in millions) | Twelve Months Ended December 31, | |||||
| 2016 (Forecast) | 2015 (Estimated) | 2014 (Actual) | Source | |||
| GAAP Net Income | $75.0 to $85.0 | $60.0 to $64.0 | $ | 36.7 | NA | |
| Adjustments: | ||||||
| + Depreciation & Amortization | 37.0 | 36.0 | 31.0 | COGS, SG&A, R&D | ||
| + Provision For Income Taxes | 32.0 | 27.0 | 16.3 | Income Taxes | ||
| + Total Interest Expense | 6.0 | 7.0 | 8.2 | Other Income | ||
| Total Adjustments | 75.0 | 70.0 | 55.5 | NA | ||
| EBITDA | $150.0 to $160.0 | $130.0 to $134.0 | $ | 92.2 | NA | |
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