Emergent BioSolutions Reports Financial Results for Fourth Quarter and Full Year 2012 Business Wire ROCKVILLE, Md. -- March 7, 2013 Emergent BioSolutions Inc. (NYSE: EBS) announced today its financial results for the fourth quarter and full year ended December 31, 2012. Total revenues for 2012 were $281.9 million as compared to $273.4 million in 2011, and net income for 2012 was $23.5 million, or $0.65 per basic share, as compared to $23.0 million, or $0.65 per basic share, in 2011. For the fourth quarter 2012, total revenues were $94.6 million as compared to $107.9 million in 2011, and net income was $16.1 million, or $0.45 per basic share, as compared to $28.7 million, or $0.80 per basic share, in 2011. Robert Kramer, executive vice president and chief financial officer of Emergent BioSolutions, commented, “Our operational achievements in 2012 marked another solid year of performance for the company, highlighted by our ongoing deliveries of BioThrax to the SNS, continued advancement of our many biodefense development contracts, progress toward licensure of Building 55, and securing designation of our Baltimore facility by BARDA as one of three Centers for Innovation in Advanced Development and Manufacturing in the nation. We look to build upon these successes in 2013 as we take definitive steps toward achieving the financial and operational goals we set out in our growth plan.” 2012 Key Operational Accomplishments *Received FDA approval for BioThrax^® (Anthrax Vaccine Adsorbed) administered in a three-dose primary series with booster doses at 12 and 18 months and annually thereafter; *Advanced toward a post-exposure prophylaxis indication for BioThrax by initiating a pivotal antibiotic non-interference study; *Progressed toward licensure of Building 55 by initiating manufacture of consistency lots; *Secured a contract option from BARDA for development of PreviThrax™ (Recombinant Protective Antigen Anthrax Vaccine, Purified); *Partnered with BARDA to establish a Center for Innovation in Advanced Development and Manufacturing; *Initiated a Phase 2 study of TRU-016 in combination with bendamustine in patients with relapsed refractory Chronic Lymphocytic Leukemia (CLL); *Initiated a Phase 1b study of TRU-016 in combination with rituximab in patients with previously untreated CLL; and *Announced a three-year plan for growth and established key financial and operational goals to be achieved by year-end 2015. 2012 Key Financial Results Product Sales For the full twelve months of 2012, product sales were $215.9 million, an increase of $13.5 million, or 7 percent, from $202.4 million in 2011, primarily due to a 15 percent increase in the number of doses of BioThrax delivered. For 4Q 2012, product sales were $74.4 million, a decrease of $7.3 million, or 9 percent, from $81.7 million in 4Q 2011, primarily due to a 4 percent decrease in the number of BioThrax doses delivered and a decrease in the average sales price per dose. Contracts and Grants Revenues For the full twelve months of 2012, contracts and grants revenue was $66.0 million, a decrease of $5.0 million, or 7 percent, from $71.0 million in 2011. The decrease in contracts and grants revenue was primarily due to decreased revenues from our agreements with Abbott and Pfizer. For 4Q 2012, contracts and grants revenue was $20.3 million, a decrease of $6.0 million, or 23 percent, from $26.3 million in 4Q 2011. The decrease in contracts and grants revenue was primarily due to decreased revenues from our agreement with Abbott. Cost of Product Sales For the full twelve months of 2012, cost of product sales was $46.1 million, an increase of $3.9 million, or 9 percent, from $42.2 million in 2011. The increase in 2012 was primarily attributable to the 15 percent increase in the number of BioThrax doses delivered. For 4Q 2012, cost of product sales was $15.1 million, an increase of $0.8 million, or 6 percent, from $14.3 million in 4Q 2011. The increase was primarily attributable to a 4 percent decrease in the number of BioThrax doses delivered. Research and Development For the full twelve months of 2012, gross research and development expenses were $120.2 million, a decrease of $4.6 million, or 4 percent, from $124.8 million in 2011. This decrease primarily reflects lower contract service costs. For 4Q 2012, gross research and development expenses were $35.9 million, an increase of $6.6 million, or 22 percent, from $29.4 million in 4Q 2011. This increase primarily reflects higher contract service costs and an upfront payment for an exclusive license to certain rights to pandemic influenza products. Net R&D expense is calculated as research and development expenses less development contract and grant reimbursements and the net loss attributable to non-controlling interests. For the full twelve months of 2012 and 2011, net R&D expenses were $48.8 million and $47.0 million, respectively. For 4Q 2012 and 2011, net R&D expenses were $14.6 million and $1.3 million, respectively. Selling, General and Administrative For the full twelve months of 2012, general and administrative expenses were $76.0 million, an increase of $1.7 million, or 2 percent, from $74.3 million in 2011. For 4Q 2012, selling, general and administrative expenses were $19.5 million, an increase of $1.2 million, or 7 percent, from $18.3 million in 4Q 2011. The twelve month and 4Q increases were primarily due to increased spending related to professional and personnel costs. Financial Condition and Liquidity Cash and cash equivalents combined with investments at December 31, 2012 was $141.7 million compared to $145.9 million at December 31, 2011. Additionally, at December 31, 2012, the accounts receivable balance was $96.0 million, as compared to $74.2 million at December 31, 2011. The accounts receivable balance for both periods is comprised primarily of unpaid amounts due related to shipments of BioThrax accepted by the US government. 2013 Forecast For 2013, the company is reaffirming its financial forecast of total revenue of $290 to $310 million, split between product sales of $230 to $240 million and contracts and grants revenue of $60 to $70 million. The company also forecasts 2013 net income of $20 to $30 million. For the first quarter of 2013, the company anticipates total revenues of $40 to $50 million. Conference Call and Webcast Company management will host a conference call at 5:00 pm Eastern on March 7, 2013 to discuss these financial results. The conference call will be accessible by dialing 888/679-8038 or 617/213-4850 (international) and providing passcode 76232628. A webcast of the conference call will be accessible from the company’s website at www.emergentbiosolutions.com, under “Investors”. A replay of the conference call will be accessible, approximately two hours following the conclusion of the call, by dialing 888/286-8010 or 617/801-6888 and using the passcode 28122043. The replay will be available through March 21, 2013. The webcast will be archived on the company’s website, www.emergentbiosolutions.com, under “Investors”. About Emergent BioSolutions Inc. Emergent BioSolutions is a specialty pharmaceutical company seeking to protect and enhance life by offering specialized products to healthcare providers and governments to address medical needs and emerging health threats. Additional information about the company may be found at www.emergentbiosolutions.com. Follow us on twitter: @emergentbiosolu 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 statements regarding our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans and objectives of management, including our expected revenue growth and net income, and any other statements containing the words “believes”, “expects”, “anticipates”, “intends”, “plans”, “estimates” and similar expressions, 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 appropriations for BioThrax^® procurement; our ability to obtain new BioThrax^® sales contracts; our plans to pursue label expansions and improvements for BioThrax^®; availability of funding for our US government grants and contracts; our ability to identify and acquire or in license products and product candidates that satisfy our selection criteria; the potential benefits of our existing collaboration agreements and our ability to enter into selective additional collaboration arrangements; our ability to expand our manufacturing facilities and capabilities; the rate and degree of market acceptance and clinical utility of our products; 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 SEC, when evaluating our forward-looking statements. Financial Statements Follow Emergent BioSolutions Inc. and Subsidiaries Consolidated Balance Sheets (in thousands, except share and per share data) December 31, 2012 2011 ASSETS Current assets: Cash and cash equivalents $ 141,666 $ 143,901 Investments - 1,966 Accounts receivable 96,043 74,153 Inventories 15,161 14,661 Deferred tax assets, net 1,264 1,735 Income tax receivable, net - 9,506 Restricted cash - 220 Prepaid expenses and other current assets 9,213 8,276 Total current assets 263,347 254,418 Property, plant and equipment, net 241,764 208,973 In-process research and development 41,800 51,400 Goodwill 5,502 5,502 Assets held for sale - 11,765 Deferred tax assets, net 11,087 13,999 Other assets 730 807 Total assets $ 564,230 $ 546,864 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 31,297 $ 40,530 Accrued expenses and other current liabilities 1,488 1,170 Accrued compensation 22,726 20,884 Contingent value rights, current portion - 1,748 Income tax payable, net 115 - Long-term indebtedness, current portion 4,470 5,360 Deferred revenue 1,811 1,362 Total current liabilities 61,907 71,054 Contingent value rights, net of current portion - 3,005 Long-term indebtedness, net of current portion 58,304 54,094 Other liabilities 1,891 1,984 Total liabilities 122,102 130,137 Commitments and contingencies Stockholders’ equity: Preferred stock, $0.001 par value; 15,000,000 shares authorized, 0 shares issued and outstanding - - at December 31, 2012 and December 31, 2011, respectively Common stock, $0.001 par value; 100,000,000 shares authorized, 36,272,550 shares issued and 35,869,392 shares outstanding at December 31, 36 36 2012; 36,002,698 shares issued and outstanding at December 31, 2011 Treasury stock, at cost, 403,158 and 0 common (5,906 ) - shares at December 31, 2012 and 2011, respectively Additional paid-in capital 230,964 220,654 Accumulated other comprehensive loss (4,129 ) (3,313 ) Retained earnings 220,393 196,869 Total Emergent BioSolutions Inc. stockholders' 441,358 414,246 equity Noncontrolling interest in subsidiaries 770 2,481 Total stockholders’ equity 442,128 416,727 Total liabilities and stockholders’ equity $ 564,230 $ 546,864 Emergent BioSolutions Inc. and Subsidiaries Consolidated Statements of Operations (in thousands, except share and per share data) Year Ended December 31, 2012 2011 Revenues: Product sales $ 215,879 $ 202,409 Contracts and grants 66,009 70,975 Total revenues 281,888 273,384 Operating expense: Cost of product sales 46,077 42,171 Research and development 120,226 124,832 Selling, general and administrative 76,018 74,282 Impairment of in-process research and 9,600 - development Income from operations 29,967 32,099 Other income (expense): Interest income 134 105 Interest expense (6 ) - Other income (expense), net 1,970 (261 ) Total other income (expense) 2,098 (156 ) Income before provision for income taxes 32,065 31,943 Provision for income taxes 13,922 15,830 Net income 18,143 16,113 Net loss attributable to noncontrolling 5,381 6,906 interest Net income attributable to Emergent $ 23,524 $ 23,019 BioSolutions Inc. Earnings per share - basic $ 0.65 $ 0.65 Earnings per share - diluted $ 0.65 $ 0.64 Weighted-average number of shares - basic 36,080,495 35,658,907 Weighted-average number of shares - diluted 36,420,662 36,206,052 Emergent BioSolutions Inc. and Subsidiaries Consolidated Statements of Operations (in thousands, except share and per share data) Three Months Ended December 31, 2012 2011 (Unaudited) Revenues: Product sales $ 74,350 $ 81,670 Contracts and grants 20,256 26,278 Total revenues 94,606 107,948 Operating expense: Cost of product sales 15,150 14,328 Research and development 35,945 29,376 Selling, general and administrative 19,476 18,254 Income from operations 24,035 45,990 Other income (expense): Interest income 31 24 Interest expense (6 ) - Other income (expense), net 222 (252 ) Total other income (expense) 247 (228 ) Income before provision for income taxes 24,282 45,762 Provision for income taxes 9,283 18,862 Net income 14,999 26,900 Net loss attributable to noncontrolling 1,105 1,757 interest Net income attributable to Emergent $ 16,104 $ 28,657 BioSolutions Inc. Earnings per share - basic $ 0.45 $ 0.80 Earnings per share - diluted $ 0.44 $ 0.78 Weighted-average number of shares - basic 35,890,640 35,972,320 Weighted-average number of shares - diluted 36,410,143 36,520,245 Emergent BioSolutions Inc. and Subsidiaries Consolidated Statements of Cash Flows (in thousands) Year Ended December 31, 2012 2011 2010 Cash flows from operating activities: Net income $ 18,143 $ 16,113 $ 47,184 Adjustments to reconcile to net cash provided by operating activities: Stock-based compensation expense 11,115 10,739 7,063 Depreciation and amortization 11,197 9,355 5,990 Deferred income taxes 3,383 20,188 9,229 Non-cash development expenses from 3,670 5,290 5,995 joint venture Change in fair value of contingent (3,005 ) 221 - value rights Impairment of in-process research 9,600 - - and development Impairment of long-lived assets - 976 1,218 Provision for impairment of accrued interest on note - - 1,032 receivable Excess tax benefits from (1,588 ) (4,608 ) (2,609 ) stock-based compensation Other (40 ) 392 (38 ) Changes in operating assets and liabilities: Accounts receivable (21,890 ) (34,873 ) 19,094 Inventories (500 ) (1,939 ) 799 Income taxes 8,055 1,422 (4,454 ) Prepaid expenses and other assets (1,038 ) 660 (764 ) Accounts payable 274 2,510 3,392 Accrued expenses and other 169 (95 ) (447 ) liabilities Accrued compensation 1,649 (3,303 ) 6,175 Deferred revenue 449 (10,863 ) (838 ) Net cash provided by operating 39,643 12,185 98,021 activities Cash flows from investing activities: Purchases of property, plant and (53,845 ) (54,026 ) (22,101 ) equipment Proceeds from sale of assets 11,765 - - Proceeds from maturity of 1,966 4,250 6,518 investments Purchase of investments - (4,187 ) - Acquisition of Trubion Pharmaceuticals, Inc., net of cash - - (17,873 ) acquired Repayment of note receivable - - 10,000 Net cash used in investing (40,114 ) (53,963 ) (23,456 ) activities Cash flows from financing activities: Proceeds from borrowings on 13,547 27,522 15,000 long-term indebtedness Issuance of common stock subject 761 10,026 7,235 to exercise of stock options Excess tax benefits from 1,588 4,608 2,609 stock-based compensation Principal payments on long-term (10,227 ) (15,494 ) (33,291 ) indebtedness and line of credit Contingent value right payment (1,748 ) (10,000 ) - Purchase of treasury stock (5,906 ) - - Restricted cash deposit 220 (3 ) (2 ) Net cash provided by (used in) (1,765 ) 16,659 (8,449 ) financing activities Effect of exchange rate changes on 1 1 (21 ) cash and cash equivalents Net increase (decrease) in cash (2,235 ) (25,118 ) 66,095 and cash equivalents Cash and cash equivalents at 143,901 169,019 102,924 beginning of year Cash and cash equivalents at end $ 141,666 $ 143,901 $ 169,019 of year Contact: Emergent BioSolutions Inc. Investor Contact Robert G. Burrows Vice President, Investor Relations 301-795-1877 BurrowsR@ebsi.com or Media Contact: Tracey Schmitt Vice President, Corporate Communications 301-795-1800 SchmittT@ebsi.com
Emergent BioSolutions Reports Financial Results for Fourth Quarter and Full Year 2012
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