Exhibit 99.1
AMRI Announces First Quarter 2017 Results
Albany, NY (May 9, 2017) – AMRI (NASDAQ: AMRI) today reported financial and operating results for the first quarter ended March 31, 2017 and provided an update to its outlook for 2017.
Highlights:
| · | First quarter total revenue of $163.8 million, up 55% from 2016 |
| · | First quarter basic and diluted EPS $(0.25); non-GAAP diluted EPS of $0.13 |
| · | First quarter net loss of $(10.7) million; non-GAAP net income of $5.7 million |
| · | First quarter adjusted EBITDAof $24.0 million, up 83% from 2016 |
| · | Company confirms 2017 financial guidance |
Non-GAAP net income, non-GAAP diluted EPS and adjusted EBITDA are non-GAAP financial measures. For a discussion of these measures and reconciliations to U.S. GAAP measures, see “Non-GAAP Financial Measures” and Tables 1, 2 and 3.
“We delivered an excellent first quarter, driven by 56 percent growth in contract revenue, 7 percent on an organic basis, including double digit organic growth in our Discovery, Development and Analytical Services (DDS) and Active Pharmaceutical Ingredient (API) businesses,” said William S. Marth, AMRI’s president and chief executive officer. “GAAP income from operations increased $6 million, a 150% increase quarter over quarter, and adjusted EBITDA increased $11 million, an 83% increase quarter over quarter, illustrating strong and efficient execution and leverage across our operations. We are confident that these trends will continue through the year and are maintaining our outlook for 2017, which includes 28% growth of contract revenue, 7% growth of organic contract revenue, and double digit earnings growth at the midpoint.”
First Quarter 2017 Results
Total revenue for the first quarter of 2017 was $163.8 million, an increase of 55%, compared to total revenue of $105.6 million reported in the first quarter of 2016.
Total contract revenue for the first quarter of 2017 was $160.2 million, an increase of 56% compared to contract revenue of $102.8 million reported in the first quarter of 2016, and organic contract revenue increased 7%.
Contract gross margin was 23% for the first quarter of 2017, consistent with contract gross margin for the first quarter of 2016. Non-GAAP contract gross margin was 27% in the first quarter of 2017, consistent with the first quarter of 2016 and reflects increased gross margin within our Drug Product (DP) business, offset by the addition of Euticals’ Fine Chemicals (FC) and API businesses.
Recurring royalty revenue in the first quarter of 2017 was $3.6 million, an increase of 31% from $2.7 million in the first quarter of 2016 due primarily to the addition of royalties resulting from our collaboration partner’s sales of nitroprusside.
Selling, general and administrative (SG&A) expense in the first quarter of 2017 was $33.4 million, up 36% from $24.6 million in the first quarter of 2016. Non-GAAP SG&A expense in the first quarter of 2017 was $27.0 million, up 47% from $18.4 million in the first quarter of 2016, due largely to additional SG&A from the Euticals’ acquisition and investments we have made in key support functions.
Net loss was $(10.7) million, or $(0.25) per basic and diluted share, in the first quarter of 2017, compared to $(10.1) million, or $(0.29) per basic and diluted share for the first quarter of 2016. Non-GAAP net income in the first quarter was $5.7 million, or $0.13 per diluted share, compared to $2.4 million, or $0.07 per diluted share, for the first quarter of 2016.
Adjusted EBITDA in the first quarter of 2017 was $24.0 million, an increase of $11.0 million or 83%, compared to the first quarter of 2016.
At March 31, 2017, AMRI had cash and cash equivalents of $35.2 million, compared to $52.0 million at December 31, 2016. During the first quarter of 2017, we used cash of $6.4 million in operating activities primarily due to the timing of payments attributable to severance, employee compensation and benefits and payments to vendors that were primarily incurred and accrued as of December 31, 2016, as well as payments associated with increased inventory levels during the period. These outflows were partially offset by collections from customers during the period. We used cash of $4.1 million in investing activities, primarily attributable to $3.9 million of capital expenditures, and we used cash of $7.2 million in financing activities, primarily related to the principal payments of long-term debt of $4.0 million and net repayments on short-term borrowings of $2.0 million.
Segment Results
Active Pharmaceutical Ingredients (API)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| (Unaudited; dollars in thousands) | 2017 | 2016 | ||||||
| API Contract Revenue (1) | $ | 103,364 | $ | 54,369 | ||||
| API Royalty Revenue | 2,765 | 2,741 | ||||||
| API Total Revenue | $ | 106,129 | $ | 57,110 | ||||
| Cost of Contract Revenue (2) | $ | 79,881 | $ | 40,666 | ||||
| Contract Gross Profit | $ | 23,483 | $ | 13,703 | ||||
| Contract Gross Margin | 22.7 | % | 25.2 | % | ||||
| Non-GAAP Contract Gross Profit (3) | $ | 28,334 | $ | 17,239 | ||||
| Non-GAAP Contract Gross Margin (3) | 27.4 | % | 31.7 | % | ||||
| Gross Profit (4) | $ | 26,248 | $ | 16,444 | ||||
| Gross Margin (4) | 24.7 | % | 28.8 | % | ||||
| Non-GAAP Gross Profit (3) (4) | $ | 31,099 | $ | 19,980 | ||||
| Non-GAAP Gross Margin (3) (4) | 29.3 | % | 35.0 | % | ||||
(1) To conform to current year presentation, contract revenue for the three months ended March 31, 2016 in the amount of $333 related to medium-scale activities in our Wisconsin facility has been reclassified from API to DDS.
(2) To better align with underlying activities and to conform to current year presentation , cost of contract revenue for the three months ended March 31, 2016 in the amount of $142 previously classified as DDS has been reclassified to API.
(3) Refer to Table 1 included in this release for the reconciliation of U.S. GAAP to non-GAAP measures.
(4) Includes royalties
API contract revenue for the first quarter of 2017 increased 90% compared to the first quarter of 2016, due to $43.4 million of incremental revenue from our Euticals’ API business and organic growth.
API contract gross margin for the first quarter of 2017 decreased 3 percentage points compared to the first quarter of 2016, primarily due to gross margins attributable to Euticals as compared to our legacy API business. API non-GAAP contract gross margin for the first quarter of 2017 decreased 4 percentage points from the first quarter of 2016 also as a result of lower margins of Euticals’ API business as compared to our legacy API business.
Discovery, Development and Analytical Services (DDS)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| (Unaudited; dollars in thousands) | 2017 | 2016 | ||||||
| DDS Contract Revenue (1) | $ | 29,167 | $ | 23,536 | ||||
| Cost of Contract Revenue (2) | 20,974 | 17,261 | ||||||
| Contract Gross Profit | $ | 8,193 | $ | 6,275 | ||||
| Contract Gross Margin | 28.1 | % | 26.7 | % | ||||
| Non-GAAP Contract Gross Profit (3) | $ | 8,627 | $ | 6,688 | ||||
| Non-GAAP Contract Gross Margin (3) | 29.6 | % | 28.4 | % | ||||
(1) To conform to current year presentation, contract revenue for the three months ended March 31, 2016 in the amount of $333 related to medium-scale actvities in our Wisconsin facility has been reclassified from API to DDS.
(2) To better align with underlying activities and to conform to current year presentation, cost of contract revenue for the three months ended March 31, 2016 in the amount of $249 previously classified as DDS has been reclassified to API ($142) and DP ($108).
(3) Refer to Table 1 included in this release for the reconciliation of U.S. GAAP to non-GAAP measures.
DDS contract revenue for the first quarter of 2017 increased 24% compared to the first quarter of 2016, due primarily to strong growth in Discovery and Chemical Development. DDS contract gross margin increased 1 percentage point in the first quarter of 2017 as compared to the first quarter of 2016. DDS non-GAAP contract gross margin increased 1 percentage point to 30% in the first quarter of 2017, driven by higher discovery services and chemical development margins.
Drug Product (DP)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| (Unaudited; dollars in thousands) | 2017 | 2016 | ||||||
| DP Contract Revenue | $ | 22,534 | $ | 24,933 | ||||
| DP Royalty Revenue | 832 | - | ||||||
| DP Total Revenue | $ | 23,366 | $ | 24,933 | ||||
| Cost of Contract Revenue (1) | $ | 17,322 | $ | 21,436 | ||||
| Contract Gross Profit | $ | 5,212 | $ | 3,497 | ||||
| Contract Gross Margin | 23.1 | % | 14.0 | % | ||||
| Non-GAAP Contract Gross Profit (2) | $ | 5,545 | $ | 3,837 | ||||
| Non-GAAP Contract Gross Margin (2) | 24.6 | % | 15.4 | % | ||||
| Gross Profit (3) | $ | 6,044 | $ | 3,497 | ||||
| Gross Margin (3) | 25.9 | % | 14.0 | % | ||||
| Non-GAAP Gross Profit (2) (3) | $ | 6,377 | $ | 3,837 | ||||
| Non-GAAP Gross Margin (2) (3) | 27.3 | % | 15.4 | % | ||||
(1) To better align with underlying activities and to conform to current year presentation, cost of contract revenue for the three months ended March 31, 2016 in the amount of $108 previously classified as DDS has been reclassified to DP.
(2) Refer to Table 1 included in this release for the reconciliation of U.S. GAAP to non-GAAP measures.
(3) Includes royalties when applicable
DP contract revenue for the first quarter of 2017 decreased 10% compared to the first quarter of 2016, primarily due to timing of shipments and planned site maintenance activities, partially offset by higher collaboration arrangement revenue. DP contract gross margin and non-GAAP contract gross margin for the first quarter 2017 both increased 9 percentage points compared to the first quarter of 2016, primarily driven by the strong operational performance at the Albuquerque, NM facility.
DP royalty revenue in the first quarter of 2017, reflects the addition of royalties resulting from our collaboration partner’s sales of nitroprusside, which began in the fourth quarter of 2016.
Fine Chemicals (FC)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| (Unaudited; dollars in thousands) | 2017 | 2016 | ||||||
| FC Contract Revenue | $ | 5,160 | $ | - | ||||
| Cost of Contract Revenue | 4,601 | - | ||||||
| Contract Gross Profit | $ | 559 | $ | - | ||||
| Contract Gross Margin | 10.8 | % | - | |||||
| Non-GAAP Contract Gross Profit (1) | $ | 746 | - | |||||
| Non-GAAP Contract Gross Margin (1) | 14.5 | % | - | |||||
(1) Refer to Table 1 included in this release for the reconciliation of U.S. GAAP to non-GAAP measures.
FC is a new reporting segment for AMRI resulting from the acquisition of Euticals in July 2016. Consequently, there are no comparable amounts for the first quarter of 2016.
Financial Outlook
AMRI’s guidance takes into account a number of factors, including expected financial results for 2017, anticipated tax rates, foreign currency fluctuations and shares outstanding.
AMRI’s estimates for full year 2017 are consistent with estimates previously provided on February 21, 2017:
2017 Guidance
| Total Revenue | $710 to $740 million | |
| Add: Negative effect of foreign exchange | (1%) | |
| Revenue growth, reported at the mid point | 28% | |
| Less: Contributions from acquisitions (1) | (15% to 16%) | |
| Revenue growth, organic (2) | 7% | |
| DDS Contract revenue growth, organic | 12% | |
| API Contract revenue growth, organic | 8% | |
| DP Contract revenue growth, organic | 8% | |
| FC Contract revenue growth, organic | (28%) | |
| GAAP contract margin | 26% | |
| Non-GAAP contract margin (3) | ~29% | |
| GAAP R&D expense, as a percent of revenue | 2% | |
| Non-GAAP R&D expense, as a percent of revenue | 2% | |
| GAAP SG&A, as a percent of revenue | 18% | |
| Non-GAAP SG&A, as a percent of revenue (3) | 15% | |
| GAAP Net loss | ($12) to ($7) million | |
| Non-GAAP Net income (3) | $47 to $52 million | |
| Adjusted EBITDA (3) | $135 to $145 million | |
| Adjusted EBITDA, as a percent of revenue (3) | 19% to 20% | |
| GAAP diluted EPS | ($0.28) to ($0.16) | |
| Non-GAAP diluted EPS (3) (4) | $1.08 to $1.20 | |
| Capital expenditures | $35 to $40 million |
Footnotes to Guidance Table
(1) Reflects the acquisition of Euticals which was completed in July 2016.
(2) Organic revenue growth is defined as reported revenue growth adjusted for acquisitions (Euticals) and foreign currency translation.
(3) Refer to Table 4 included in this release for reconciliation of forward-looking non-GAAP financial measures to forward looking GAAP financial measures.
(4) Assumes tax rate of approximately 28% and 44 million shares outstanding.
First Quarter Results Conference Call
AMRI will host a conference call and webcast today at 8:30 a.m. ET to discuss first quarter 2017 results, as well as guidance for 2017. The conference call can be accessed by dialing (866) 208-5728 (domestic calls) or (224) 633-1279 (international calls) at 8:20 a.m. ET and entering passcode7657377.The webcast and supplementing slides can be accessed on the company’s website atwww.amriglobal.com.
A replay of the conference call can be accessed for 24 hours at (855) 859-2056 (domestic calls) or (404) 537-3406 (international calls) and entering passcode 75749093. Replays of the webcast can also be accessed for up to 90 days after the call via the investor area of the company’s website athttp://ir.amriglobal.com.
About AMRI
Albany Molecular Research Inc. (AMRI) is a global contract research and manufacturing organization that has been working with the Life Sciences industry to improve patient outcomes and the quality of life for more than two decades. With locations in North America,Europe and Asia, our key business segments include Discovery and Development Services (DDS), Active Pharmaceutical Ingredients (API), Drug Product (DP), and Fine Chemicals (FC).For more information about AMRI, please visit our website atwww.amriglobal.com or follow us on Twitter (@amriglobal).
Forward-looking Statements
This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, all of the estimates under “Financial Outlook” and statements regarding, among other things, the performance of the Company’s previously acquired businesses, the strength of the Company’s commercial operations and prospects, projections regarding future revenues and financial performance, and the Company’s momentum and long-term growth. The words “outlook”, “guidance”, “anticipates”, “believes”, “expects”, “may”, “plans”, “predicts”, “will”, “potential”, “goal” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Readers should not place undue reliance on these forward-looking statements. The Company’s actual results may differ materially from such forward-looking statements as a result of numerous factors, some of which the Company may not be able to predict and may not be within the Company’s control. Factors that could cause such differences include, but are not limited to, changes in customers’ spending and demand and the trends in pharmaceutical and biotechnology companies’ outsourcing of manufacturing services and research and development; the Company’s ability to provide quality and timely services and to compete with other companies providing similar services; the Company’s ability to comply with strict regulatory requirements; the Company’s ability to successfully integrate past and future acquisitions and to realize the expected benefits of each; disruptions in the Company’s ability to source raw materials; a change in the Company’s relationships with its largest customers; the Company’s ability to service its indebtedness; the Company’s ability to protect its technology and proprietary information and the confidential information of its customers; the Company’s ability to develop products of commercial value under its collaboration arrangements; the risk of patent infringement and other litigation; as well as those risks discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 as filed with the Securities and Exchange Commission (SEC) on March 16, 2017, subsequent Quarterly Reports filed with the SEC and the Company’s other SEC filings. The financial guidance offered by senior management with respect to 2017 represents a point-in-time estimate and is based on information as of the date of this press release. Senior management has made numerous assumptions in providing this guidance which, while believed to be reasonable, may not prove to be accurate. Numerous factors, including those noted above, may cause actual results to differ materially from the guidance provided. The Company expressly disclaims any current intention or obligation to update the guidance provided or any other forward-looking statement in this press release to reflect future events or changes in facts assumed for purposes of providing this guidance or otherwise affecting the forward-looking statements contained in this press release.
Non-GAAP Financial Measures
To supplement our financial results prepared in accordance with U.S. GAAP, we have presented non-GAAP measures of contract gross profit, contract gross margin, gross profit, gross margin, SG&A, net income, and earnings per diluted share, adjusted to exclude certain charges (and gains when applicable) that relate to specific events or transactions, such as impairment charges, restructuring charges, executive transition costs, business acquisition costs, realized and unrealized gains and losses on foreign currency transactions related to business acquisitions, and ERP implementation costs. Management typically excludes these amounts when evaluating our operating performance and believes that the resulting non-GAAP measures provide investors with a consistent basis for comparison across periods and, therefore, are useful to investors in assessing our operating performance.
Our U.S. GAAP measures are also adjusted to exclude certain non-cash charges (and gains when applicable) such as non-cash debt interest and amortization charges, share-based compensation expense, acquisition accounting inventory adjustments, and acquisition accounting depreciation and amortization for the periods presented for 2017 and 2016. Management typically excludes the amounts described above when evaluating our operating performance and believes that the resulting non-GAAP measures are useful to investors in assessing our operating performance.
We have also presented the non-GAAP measure of adjusted EBITDA, which in addition to the items excluded above, further excludes the impact of interest income and expense, depreciation and amortization expense, and income tax expense or benefit.
We believe presentation of our non-GAAP measures enhances an overall understanding of our historical financial performance because we believe these measures are an indication of the performance of our base business. Management uses these non-GAAP measures as a basis for evaluating our financial performance as well as for budgeting and forecasting of future periods. For these reasons, we believe they can be useful to investors. The presentation of this additional information should not be considered in isolation or as a substitute for the related GAAP measures. Reconciliations of these non-GAAP measures to the most directly comparable GAAP financial measures are set forth in Tables 1-3.
A reconciliation of forward-looking non-GAAP financial measures to the most directly comparable GAAP financial measures has been included in Table 4.
A reconciliation of organic revenue financialmeasures to the most directly comparable GAAP financial measures has been included in Table 5.
Contacts:
Investors
Patty Eisenhaur
AMRI Investor Relations
patty.eisenhaur@amriglobal.com
518-512-2936
Media
Gina Rothe
AMRI Communications
gina.rothe@amriglobal.com
518-512-2512
Carolyn Hawley
Canale Communications
Carolyn@canalecomm.com
619-849-5382
Albany Molecular Research, Inc.
Selected Condensed Consolidated Balance Sheet Data
(unaudited)
| March 31, | December 31, | |||||||
| (Dollars in thousands) | 2017 | 2016 | ||||||
| Cash and cash equivalents | $ | 35,193 | $ | 52,000 | ||||
| Restricted cash | $ | 243 | $ | 236 | ||||
| Accounts receivable, net | $ | 139,705 | $ | 144,795 | ||||
| Royalty income receivable | $ | 5,236 | $ | 3,486 | ||||
| Inventory | $ | 174,043 | $ | 167,111 | ||||
| Total current assets | $ | 385,150 | $ | 392,911 | ||||
| Property and equipment, net | $ | 360,282 | $ | 364,806 | ||||
| Total assets | $ | 1,163,529 | $ | 1,209,648 | ||||
| Total current liabilities | $ | 167,012 | $ | 175,518 | ||||
| Long-term debt, excluding current installments, net of unamortized discount | $ | 607,246 | $ | 604,476 | ||||
| Total liabilities | $ | 866,730 | $ | 910,666 | ||||
| Total stockholders’ equity | $ | 296,799 | $ | 298,982 | ||||
| Total liabilities and stockholders’ equity | $ | 1,163,529 | $ | 1,209,648 | ||||
Albany Molecular Research, Inc.
Condensed Consolidated Statements of Operations (unaudited)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| (Dollars in thousands, except for per share data) | 2017 | 2016 | ||||||
| Contract revenue | $ | 160,225 | $ | 102,838 | ||||
| Recurring royalties | 3,597 | 2,741 | ||||||
| Total revenue | 163,822 | 105,579 | ||||||
| Cost of contract revenue | 122,778 | 79,363 | ||||||
| Research and development | 3,374 | 3,168 | ||||||
| Selling, general and administrative | 33,430 | 24,600 | ||||||
| Restructuring and other charges | 2,159 | 2,600 | ||||||
| Total operating expenses | 161,741 | 109,731 | ||||||
| Income (loss) from operations | 2,081 | (4,152 | ) | |||||
| Interest expense, net | (12,830 | ) | (7,136 | ) | ||||
| Other expense, net | (793 | ) | (997 | ) | ||||
| Loss before income taxes | (11,542 | ) | (12,285 | ) | ||||
| Income tax benefit | (850 | ) | (2,218 | ) | ||||
| Net loss | $ | (10,692 | ) | $ | (10,067 | ) | ||
| Basic and diluted loss per share | $ | (0.25 | ) | $ | (0.29 | ) | ||
| Weighted avg. BASIC shares outstanding | 42,385 | 34,718 | ||||||
| Weighted avg. DILUTED shares outstanding | 43,349 | 35,702 | ||||||
Table 1: Reconciliation of three months ended March 31, 2017 and 2016 contract gross profit and contract gross margin to the non-GAAP financial measures of contract gross profit and non-GAAP contract gross margin.
| Non-GAAP Measures | Three Months Ended | |||||||
| (Dollars in thousands) | March 31, | |||||||
| 2017 | 2016 | |||||||
| Consolidated Contract Revenue, as reported | $ | 160,225 | $ | 102,838 | ||||
| Consolidated Cost of Contract Revenue, as reported | 122,778 | 79,363 | ||||||
| Consolidated Contract Gross Profit, as reported | 37,447 | 23,475 | ||||||
| add: Share-based compensation expense | 319 | 279 | ||||||
| add: Acquisition accounting inventory adjustments | - | 3,310 | ||||||
| add: Acquisition accounting depreciation and amortization | 5,486 | 700 | ||||||
| Non-GAAP Consolidated Contract Gross Profit | $ | 43,252 | $ | 27,764 | ||||
| Consolidated Contract Gross Margin, as reported | 23.4 | % | 22.8 | % | ||||
| Non-GAAP Consolidated Contract Gross Margin | 27.0 | % | 27.0 | % | ||||
| DDS Segment Contract Revenue, as reported | $ | 29,167 | $ | 23,536 | ||||
| DDS Segment Cost of Contract Revenue, as reported | 20,974 | 17,261 | ||||||
| DDS Segment Contract Gross Profit, as reported | 8,193 | 6,275 | ||||||
| add: Share-based compensation expense | 135 | 134 | ||||||
| add: Acquisition accounting depreciation | 299 | 279 | ||||||
| Non-GAAP DDS Segment Contract Gross Profit | $ | 8,627 | $ | 6,688 | ||||
| DDS Segment Contract Gross Margin, as reported | 28.1 | % | 26.7 | % | ||||
| Non-GAAP DDS Segment Contract Gross Margin | 29.6 | % | 28.4 | % | ||||
| API Segment Contract Revenue, as reported | $ | 103,364 | $ | 54,369 | ||||
| API Segment Cost of Contract Revenue, as reported | 79,881 | 40,666 | ||||||
| API Segment Contract Gross Profit, as reported | 23,483 | 13,703 | ||||||
| add: Share-based compensation expense | 113 | 91 | ||||||
| add: Acquisition accounting inventory adjustments | - | 3,310 | ||||||
| add: Acquisition accounting depreciation and amortization | 4,738 | 135 | ||||||
| Non-GAAP API Segment Contract Gross Profit | $ | 28,334 | $ | 17,239 | ||||
| API Segment Contract Gross Margin, as reported | 22.7 | % | 25.2 | % | ||||
| Non-GAAP API Segment Contract Gross Margin | 27.4 | % | 31.7 | % | ||||
| DP Segment Contract Revenue, as reported | $ | 22,534 | $ | 24,933 | ||||
| DP Segment Cost of Contract Revenue, as reported | 17,322 | 21,436 | ||||||
| DP Segment Contract Gross Profit, as reported | 5,212 | 3,497 | ||||||
| add: Share-based compensation expense | 71 | 54 | ||||||
| add: Acquisition accounting depreciation and amortization | 262 | 286 | ||||||
| Non-GAAP DP Segment Contract Gross Profit | $ | 5,545 | $ | 3,837 | ||||
| DP Segment Contract Gross Margin, as reported | 23.1 | % | 14.0 | % | ||||
| Non-GAAP DP Segment Contract Gross Margin | 24.6 | % | 15.4 | % | ||||
| FC Segment Contract Revenue, as reported | $ | 5,160 | $ | - | ||||
| FC Segment Cost of Contract Revenue, as reported | 4,601 | - | ||||||
| FC Segment Contract Gross Profit, as reported | 559 | - | ||||||
| add: Acquisition accounting depreciation and amortization | 187 | - | ||||||
| Non-GAAP FC Segment Contract Gross Profit | $ | 746 | $ | - | ||||
| FC Segment Contract Gross Margin, as reported | 10.8 | % | - | |||||
| Non-GAAP FC Segment Contract Gross Margin | 14.5 | % | - | |||||
Table 2: Reconciliation of select financial measures to non-GAAP financial measures for the three months ended March 31, 2017 and 2016:
Table 2: Reconciliation of non-GAAP measures for the three months ended March 31, 2017 and 2016
(Dollars in thousands, except for per share data)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2017 | 2016 | |||||||
| Consolidated net loss, as reported | (10,692 | ) | (10,067 | ) | ||||
| Acquisition accounting depreciation and amortization | 8,588 | 2,268 | ||||||
| Non-cash interest and amortization charges | 5,063 | 2,772 | ||||||
| Income tax effects of Non-GAAP adjustments | (2,974 | ) | (3,447 | ) | ||||
| Share-based compensation expense | 2,355 | 2,140 | ||||||
| Restructuring and other charges | 2,159 | 1,458 | ||||||
| Non-recurring professional fees | 840 | - | ||||||
| Business acquisition costs | 264 | 2,174 | ||||||
| ERP implementation costs | 141 | 623 | ||||||
| Acquisition accounting inventory adjustments | - | 3,310 | ||||||
| Acquisition accounting depreciation adjustments in restructuring | - | 1,142 | ||||||
| Non-GAAP net income | $ | 5,744 | $ | 2,373 | ||||
| Consolidated Basic loss per share, as reported | $ | (0.25 | ) | $ | (0.29 | ) | ||
| Effects of Non-GAAP adjustments | 0.39 | 0.36 | ||||||
| Non-GAAP Basic earnings per share | $ | 0.14 | $ | 0.07 | ||||
| Consolidated Diluted loss per share, as reported | $ | (0.25 | ) | $ | (0.29 | ) | ||
| Effects of Non-GAAP adjustments | 0.38 | 0.36 | ||||||
| Non-GAAP Diluted earnings per share | $ | 0.13 | $ | 0.07 | ||||
| Consolidated Cost of Contract Revenue, as reported | $ | 122,778 | $ | 79,363 | ||||
| Acquisition accounting depreciation and amortization | (5,486 | ) | (700 | ) | ||||
| Share-based compensation expense | (319 | ) | (279 | ) | ||||
| Acquisition accounting inventory adjustments | - | (3,310 | ) | |||||
| Non-GAAP Cost of Contract Revenue | $ | 116,973 | $ | 75,074 | ||||
| Consolidated Selling, general and administrative, as reported | $ | 33,430 | $ | 24,600 | ||||
| Acquisition accounting depreciation and amortization | (3,102 | ) | (1,568 | ) | ||||
| Share-based compensation expense | (2,036 | ) | (1,861 | ) | ||||
| Non-recurring professional fees | (840 | ) | - | |||||
| Business acquisition costs | (264 | ) | (2,174 | ) | ||||
| ERP implementation costs | (141 | ) | (623 | ) | ||||
| Non-GAAP Selling, general and administrative | $ | 27,047 | $ | 18,374 | ||||
| Consolidated Interest expense, as reported | $ | 12,830 | $ | 7,136 | ||||
| Non-cash interest and amortization charges | (5,063 | ) | (1,142 | ) | ||||
| Non-GAAP Interest expense | $ | 7,767 | $ | 5,994 | ||||
Table 3: Reconciliation of the three months ended March 31, 2017 and 2016 net loss to the non-GAAP financial measure of adjusted EBITDA:
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2017 | 2016 | |||||||
| Net loss, as reported | $ | (10,692 | ) | $ | (10,067 | ) | ||
| Depreciation and amortization | 16,857 | 8,524 | ||||||
| Interest expense, net | 12,830 | 7,136 | ||||||
| Income tax benefit | (850 | ) | (2,218 | ) | ||||
| EBITDA | 18,145 | 3,375 | ||||||
| Share-based compensation expense | 2,355 | 2,140 | ||||||
| Restructuring and other charges | 2,159 | 1,458 | ||||||
| Non-recurring professional fees | 887 | - | ||||||
| Business acquisition costs | 264 | 2,174 | ||||||
| ERP Implementation costs | 141 | 623 | ||||||
| Acquisition accounting inventory adjustments | - | 3,310 | ||||||
| Adjusted EBITDA | $ | 23,951 | $ | 13,080 | ||||
| Adjusted EBITDA Margin: | ||||||||
| Adjusted EBITDA as a percent of total revenue | 15 | % | 12 | % | ||||
Table 4: Reconciliation of forward-looking GAAP financial measures to forward looking non-GAAP financial measures:
When planning, forecasting and analyzing future periods, the Company does so primarily on a non-GAAP basis without preparing a GAAP analysis as that would require estimates for various reconciling items that would be difficult to predict with reasonable accuracy. For example, it is difficult for the Company to anticipate the need for, or magnitude of, any presently unforeseen one-time restructuring expense or business acquisition costs. As a result, the Company has prepared the below reconciliation using estimates of reconciling items that are currently expected to be excluded from the non-GAAP financial measures in future periods. The Company is unable to include all reconciling items at this time without unreasonable effort due to the unavailability of the information needed to calculate reconciling items and due to variability, complexity and limited visibility to events or conditions in future periods.
Reconciliation of GAAP net loss and GAAP diluted loss per share to non-GAAP net income and non-GAAP diluted earnings per share (Dollars in millions, except per share amounts)
| Low | High | |||||||
| GAAP net loss | $ | (12 | ) | $ | (7 | ) | ||
| Reconciling items (a) | $ | 59 | $ | 59 | ||||
| Non-GAAP net income | $ | 47 | $ | 52 | ||||
| GAAP diluted loss per share | $ | (0.28 | ) | $ | (0.16 | ) | ||
| Non-GAAP diluted earnings per share | $ | 1.08 | $ | 1.20 | ||||
(a) Reconciling items primarily include restructuring costs, acquisition accounting depreciation and amortization, share-based compensation, non-cash debt interest and amortization charges and the tax effect for such items.
Reconciliation of GAAP net loss to Adjusted EBITDA (Dollars in millions)
| Low | High | |||||||
| GAAP net loss | $ | (12 | ) | $ | (7 | ) | ||
| Income tax (benefit) expense | $ | 12 | $ | 13 | ||||
| Interest expense, net | $ | 48 | $ | 48 | ||||
| Depreciation and amortization | $ | 62 | $ | 66 | ||||
| EBITDA | $ | 110 | $ | 121 | ||||
| Reconciling items (b) | $ | 24 | $ | 24 | ||||
| Adjusted EBITDA | $ | 135 | $ | 145 | ||||
(b) Reconciling items primarily include restructuring costs, share-based compensation charges and the tax effect of all non-gaap reconciling items.
Reconciliation of GAAP contract gross margin to non-GAAP contract gross margin
| GAAP contract gross margin | 26 | % | ||
| Add: acquisition accounting depreciation and share-based compensation | 3 | % | ||
| Non-GAAP contract gross margin | 29 | % |
Reconciliation of GAAP SG&A as a percentage of contract revenue to non-GAAP SG&A as a percentage of contract revenue
| GAAP Selling, General and Administrative Expense | 18 | % | ||
| Reconciling items (c) | (3 | )% | ||
| Non-GAAP Selling, General, and Administrative Expense | 15 | % |
(c) Reconciling items primarily include acquisition accounting depreciation and amortization and share-based compensation.
Table 5: Reconciliation of non-GAAP organic revenue for the three months ended March 31, 2017 and 2016:
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2017 | 2016 | |||||||
| Consolidated Contract Revenue, as reported | $ | 160,225 | $ | 102,838 | ||||
| Less: Euticals contract revenue | (49,976 | ) | - | |||||
| Non-GAAP: Organic Consolidated Contract Revenue | $ | 110,249 | $ | 102,838 | ||||
| Non-GAAP: Organic Consolidated Contract Revenue Growth | 7 | % | ||||||
| API Contract Revenue, as reported | $ | 103,363 | $ | 54,369 | ||||
| Less: Euticals API contract revenue | (43,412 | ) | - | |||||
| Non-GAAP: Organic API Contract Revenue | $ | 59,951 | $ | 54,369 | ||||
| Non-GAAP: Organic API Contract Revenue Growth | 10 | % | ||||||
| DDS Contract Revenue, as reported | $ | 29,166 | $ | 23,536 | ||||
| Less: Euticals DDS contract revenue | (1,404 | ) | - | |||||
| Non-GAAP: Organic DDS Contract Revenue | $ | 27,762 | $ | 23,536 | ||||
| Non-GAAP: Organic DDS Contract Revenue Growth | 18 | % | ||||||