EBS - Earnings call transcript Q1 2024 | Emergent BioSolutions Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon, everyone. I'm the operator for today's call. Thank you for joining today as Emergent discusses their operational and financial results for the first quarter of 2024.

As is customary, today's call is open to all participants, and the call is being recorded and is copyrighted by Emergent BioSolutions.

In addition to today's press release, there is a series of slides accompanying this webcast available to all webcast participants.

X. Slide to Turning

current Emergent of Investors their any law, should projections prospects forward-looking as the business, as forward-looking the except reports statements on forward-looking not performance. call, future expectations does statements their Any date events. and events or other of related These forward-looking their based statement are Emergent to future or this statements. filed evaluating required information, only consider by statements beliefs circumstances. to cautionary may today's well and statements risk to and regarding in call as reflect factors with make speaks new update Emergent's forward-looking future when intentions, the undertake as SEC identified During events, conference their this periodic

During found today's performance. also Emergent adjustments regarding GAAP certain figures measures greater financial refer order Please may to Emergent's to non-GAAP in transparency that to press tables provide release. involve in operating today's call, discuss the

to on Turning Chief will Vice agenda who and will call product who for Officer, Executive President QX today's will comment Joe of President current to speak company for and by a XXXX the followed be Papa, financials Officer, the XXXX business Financial first Rich Chief year include will fiscal Lindahl, This and and updates; Executive X. key quarter Slide state and guidance. The Q&A.

to listening today's may may was for Emergent X, the and announcements Since held May Finally, during on call. be of made to recorded XXXX. this have discussed benefit who those this related and of replay webcast, call the topics then,

Joe Chief opening Officer, for remarks. like over And with to the Executive turn call that, Papa, Joe? to now would I

Joseph Papa

our Lindahl, Chief for joining and first Rich I'm Officer. results. thank discuss everyone, joined Financial our Hello, today by quarter to us XXXX you

about for outlook comments, future will quarter XXXX. I'll our as guidance the year talk full Following then QX for and Emergent. catalysts performance, updated at my opening our detail second growth well drivers provide Rich as

reduce role business. First, footprint, critical in When the operations to of talked transform core a prioritize plan as our addressing Also, and to a debt and we enterprise our our near-term company. stabilize, begin multiyear today most in earlier I to consolidate turnaround February, want capabilities challenge identified a our on by plan. I stepped to executing of the Emergent's critical about announcement surrounding made CEO position stabilization the component

that mission require working We impact save is would product enhance improving is type or understood and and our very by that employees the our on driven company's our firsthand why reducing any inspired capital that reducing total asset And evaluating difficult. of and debt performance, are I've lives. help seen operating protect, workforce sales. to

way customer-focused, our to footprint that still the However, the review all we Board and we by to by after leaner, customers. supply a careful need team management will flexible a allow products operate, and restructure create more a needed team, our streamlined manufacturing us

plans. Beyond achievements or X, of our plans our in the on we the transformation restructuring first highlight phase XXXX multiyear in business stabilization Page QX

safe and we medical our exploring we business services identifying and existing opportunities, everything always on underpin crisis will to to focus do. CDMO product and organization protecting Nasal NARCAN business cost and Spray, our business opportunities simplified a areas and improve grow customers our our forward, opioid countermeasures patients demand in actions, Going new key support key implement the meeting quality growth ensuring enable including structure that

the making Emergent's focus is products that are by item on will challenging, not needed that difficult our customers. An change

to focus capabilities the we on deliver. value business, underscores health. call, continue plan significant unique and position We'll the and public bolster As we as we I global the mentioned moat during products a threats, multiyear leader public our in our our last reviewed across to we offer believe health executing earnings our around

including we a quarter of expenses number quarter, significant first metrics, consensus and was business great performance Overall, is in also a reduced gross the it a adjusted to ahead improvements which expectations, EBITDA. and great of first revenue, operating adjusted start During margin, achieved internal and XXXX.

know, we you agreement into entered a through lenders As forbearance last April with XX. quarter, our

Our conversation new delighted group yesterday, continued we announce bank with are the a to amendment. just and bank

to will our plan runway stabilize our and position. extend on financial amendment our business go-forward This execute

quarter. our We key also strengthened the stakeholders with relationship during

the over products. means gain conversations These driving medical in improve and and the and with incredibly with willingness renewed collaborative international across U.S. held their Strategic guidance. BARDA, our meetings House of National improved which the agencies, a been Emergent Defense, X Over results on dozen and have to clarity productive also last are revenue Department months, key to government from reflected White planning the to engage countermeasures long-term These a we've communications, to critical Stockpile success. stakeholders reflect are including needs

efforts sites. about in initiated divest We've to future. near the have Consistent of already in also this for hope multiple one albeit initiative We to to sites. our comments our of and/or more we smaller with sites, received March, one orders products our say

FDA. as commitment prioritization to Bayview manufacturing the status NAI no evident we received action announced the also clients Our across or in a company first instilling the quality facility our of culture from was classification indicated quarter Baltimore

to are this across have worked our compliance the organization. and and the of achieve colleagues standard to proud quality relentlessly We who will hear of highest status continue

Rich business it over year XXXX our XXXX revised to review I'll full guidance. now turn QX our and to

Richard Lindahl

Thanks, Joe. call. thank Good you everyone, afternoon, and the for joining

against of foundation. we're discussed, As strengthening business financial our priorities Joe near-term our has progress the stabilizing and just significant making

parts our on with expenses. by U.S. reduce We facility quarter aggressive further credit priorities, our outlook operating our business clarity near-term significantly to taking execute procurement profit strong We we today our of to the increased XXXX growth. combined are several year-over-year and ability support improve seek as our delivered We're against first amended accomplishments. delivering our results key to government we debt. to report raising driven performance reduced with actions further Our reflects all operating

quarter exceeded Turning guidance. revenue in results. our first quarter, to had We the strong our which

X% first negative Slide versus highlights last quarter Anthrax BAT. in also gross year. of X, the prior the of an MCM XX% compared adjusted the revenues million prior $XXX million, in on of net MCM, year. Adjusted Total over income total material EBITDA and quarter and in segment million, million the a reported the $XX NARCAN indicated adjusted of Smallpox margin improved As by last $XX $XXX materially versus year to and $XXX improvement XX% driven increase million of negative include year

channels Slide Anthrax versus of ACAMXXXX contract strength the sales NARCAN an year. year-over-year, XX the and million, BARDA year-over-year, XXX% this XX% CYFENDUS into demonstrating million, by final sales offset OTC $XX $XXX shipments of U.S. Diving branded of provided option public that sales to of NARCAN increase $XX million, by year, prior NARCAN. deliveries of lower government's sales we Stockpile, partially higher $XX VIGIV. U.S. under $XX deeper continued last million X Smallpox items by the quarterly of up the announced MCM revenues. up driven to NARCAN, November by driven durability by MCM of on of million and include Canadian branded driven and interest National Strategic including retail sales Important on product sales

total year, our increase and versus on the million, $XX revenues And primarily million, related of sales $XX $XX Other transition to existing million to BAT RSDL. of prior focus of customers. continued bioservices an product reflecting

to as to driven well by sales taken Travel management $XX the of SG&A the million, NARCAN. and to to on operating debt of million, cash expenses offset by supporting of product XXXX. XX% and $XX $XX of total R&D prior products, of reduced Cost initiatives, Turning expenses driven as cost volume actions divestiture sales in note, sales the key million, sales our of product offset year in Cost a flow impact initiatives. Cost activities were to was as shutdown quarter NARCAN on manage by XX. operating by to reflecting quarter Of in Health strong improve $XX expenses down taken expenses partially of impact $XX focus the restructuring Bioservices Slide million, reflecting spend commercial in of profitability improving was related Nordic An the expense costs. medical we primarily CYFENDUS including compared decrease countermeasure other profitability. position. Bavarian of the MCM million,

segment or was $XXX MCM The segment, adjusted With Slide XX%. review XX Smallpox the that, quarter. revenues were performance and $XX or by the Anthrax, gross In million million adjusted segment of during BAT. segment, gross margin XX%. let's comprised million, was NARCAN and were entirely move the $XX million revenues commercial and In to $XXX driven segment margin

margin As million. million, for and $XX was segment the gross Services $XX revenues segment, adjusted negative were

cash of Operating $XX which facility. versus change March of sheet timing balance select first $XX now quarter, net to Capital reduction versus the highlights. and turn availability million. is to as touch ended quarter position expenditures with our year. flow the And due were on in XXXX. debt collection was prior The was XX, under cash XXXX, XX% Slide the cash in and which We improved $XX AR. versus liquidity, quarter credit revolving the our of negative sales flow and million, XX the $XXX first significantly million was a prior liquidity including quarter and cash I'll and in million first

changes and actions to those our improve a to cost Earlier our will savings and priority support implemented. spray our July enable These to set today, result $XX most efforts key million reduce debt. the executing fully effective announced X, when actions the strategic approximately our our we footprint core XXXX, reduce in turnaround that nasal organization NARCAN of decision difficult include structure, making prioritizing only critical we're to annualized MCM businesses. of estimate We capabilities

The to costs and XXXX. $XX incurred of $XX million approximately actions third million expected estimated associated in are be to these to are the with quarter be

they to that [indiscernible] the confident are these XXXX. are of be second in efforts, incurred quarter We expected

greater confident We in future consistency an are profitability. achieving performance efforts to important improving operating and that are these step

another have We by us? that XXXX credit [Technical amendment against also certain This into hear our Difficulty]. you waivers Howard, can secured granting amendment provided ability we facilities. priorities to will to our execute senior announced yesterday our entered support

Operator

you, now. can I sir. you hear I can hear

Richard Lindahl

I'm going that the we guidance dropped? the to Is of at where start section. beginning

Operator

Yes.

Richard Lindahl

see XXXX please XX. to turning guidance, So Slide

which raise is While operating confidence efforts us making will performance our XXXX giving the those we're time. this to towards goals, not outlook our significant improve at overnight, progress happen to

guidance XXXX as As growth channel commercial public with in $XXX with of demand U.S. of $X channel. the forecasting this $XXX evening, retail expect as and in year combined interest in release $X.X product further We're billion. our we to to NARCAN full revenues billion total for million we're announced OTC press million the providing NARCAN follows: for continued strong sales Canada,

last our government Since MCM on we've improve forecasting million. with for report We're sales to of the our $XXX million engage stakeholders countermeasure U.S. products. other to March CYFENDUS product and to visibility X, $XXX continued medical procurement

we government's segment. We're services a a therefore to revenue $XX result of have understanding this narrowing serve revenue our the outcomes our for As potential are intention near term better the $XX of those in and commitment to U.S. and conversations, range of million, medium existing million XXXX the forecasting segment of reflecting customers.

adjusted organizational We're revenue of Shifting actions. range changes segments. impact $XXX million, and of our additional reduction announced forecasting The expectations the million profile EBITDA our to today, of to the capacity reflecting utilization our XXXX profitability cost $XXX across metrics.

the a of For adjusted profitability efforts. reflecting XXXX over gross XXXX, full segment total margin an of year of full we're increase primarily level XX% ] forecasting impact our improvement [ to XX%, the

QX approximately at $XX further $XXX X%. now update. and around of some a Interest guidance. anticipated $XX be of amortization. year That as and We've in to million, I'll million thoughts. $XXX also range assumptions for the Total call some fully $XXX of CapEx $XX to a spend forecasted is million all of our percentage R&D depreciation terms for diluted average is turn Weighted revenues shares over financial million. Joe million. our the around million revenue approximately of we're to expense additional new agreements. Finally, credit is reflecting full forecasting included spend back

Joseph Papa

Thank you, Rich.

last mentioned long-term is of driving another As growth. profitable turnaround quarter, key I our element

me. the One and product external our of to we is This reporting today search individual internal all improving both announced Emergent together will of This Scientific our a brings innovation search to first efforts, candidates. of include the pipeline. science steps long-term earlier bring initiation Chief Officer

NARCAN now growth on Nasal and me update an our core products starting provide with future Let drivers, Spray.

impact epidemic to The saves a across opioid availability to awareness vital through XX, a way lives needs crisis by as Turning we Spray. space, time. will market Nasal generic the our combat efforts To the be to we share who do have Slide Emergent expect of NARCAN impacted be devastating continues of to by getting expanding opioid and health access, the the to it. world, remain leader NARCAN clear, committed NARCAN over opioid reversal competitors everyone

However, continue to like funds, settlement we forces expect overdoses expand will NARCAN NARCAN market and continuing access demand. need for opioid the also opioid increased total

Nasal Since NARCAN continue purchase Spray is with anticipated public the thousands manufacturing to OTC or drug to prepared are by demand made at meet mass the hundreds supply channel, Canada. perspective. available interest performance NARCAN And a and online retailers Year-to-date, of driven plan well sites. and to strong from tracking U.S. grocery we e-commerce to be launch,

workplaces. called access This by we facilitates quarter, Narcanworkplace.com. life-saving getting to also expanded This directly ordering direct a the platform the treatment NARCAN into creating

reach around the partners Council importance National new the to and businesses safety. educate with engaged have We Safety workplace of like

Emerson lost. been completed survey NARCAN number to deaths suggests our lives Sadly, the still immense brought on the the from on of younger is is opioid today data broader that at impact penetration unacceptable set especially has The the to Spray just retailers. to and In need looking of for support adults. Americans addition, of a there Group recently we reduce to number released Nasal

to to support availability crisis bipartisan continued across advocacy leaders government, and and seeing ongoing are increase with of have the groups We address the naloxone. retail and access opioid engagement

catalysts highlight of On NARCAN several Page future XX, drivers of growth. we the and

policy encouraging agencies with to NARCAN. prioritize Canada accounts Health districts coverage. been spending convenience businesses goal to naloxone to accounts are distribute working We supporting and flexible NARCAN. carry and kits working barriers This to savings Medicaid health to a continue naloxone, efforts access to ensure with eligible to containing for school state closely naloxone and reduce includes with for We've prior

will -- partnerships Canada, the NARCAN exploring through growth. U.S. that increase internally to or expand active believe and we're internationally opportunities Finally, beyond either we

to Turning MCM to Slide XX review business. our

open the We public how sustainable health lines allied by and continue to preparedness. deliver in maintaining governments U.S. communication plans their on and discussions long-term support can commitments to engaging our threat of we for

During the our for purchase orders government clarity post-exposure received anthrax vaccine. last regarding few months, also CYFENDUS, the from future we

ACAM For our National contract. we Stockpile, finalizing modification are the a Strategic on

procure Smallpox. U.S. continuous In across following clarity and from addition, government antitoxin we have notices level received botulism which treatment of XXXX use to portfolio. complications U.S. of resulting product a the our BAT, VIG, intent our from This for support in demonstrates is government

growth Page drivers. review XX, On catalyst and MCM

chemical on our our leading referenced a we're that last most Ebola pressing vital. including call, preparedness world, biodefense global contractor, anthrax, As the smallpox, as role believe health We addressing and threats around remains in public the threats. botulism,

drivers Slide the on future few in-line on I'd a on like based the to potential XX, to moments of expansion products. Finally, growth for take focus our organization

security. collaboration have in driver expansion international public will an in across health vital First, partners important we more Global our global growth key our and believe health preparedness be business. factor a improving with been never is international

increased products. access our products believe with these well and of international on continue year partners the will In seeing public we are ahead, we're our fulfill to to the building positioned focus across critical needs globe. We to partnerships preparedness expand the our health

by need. In patient summary, although Our positioned has protect, With impact enhance our meet making in threats growth life saves well lives product world. I'm today and we significant initiative, fuel progress our execute help customer portfolio are management to turnaround against around to and to are the cycle future the public a strategy. early transformation to refreshed health process, drivers encouraging we it's

guidance with for public months to domestic improvements. results Importantly, Emergent innovative greater our full to prepare believe our opportunities to look health financial of health partners We stakeholders reflected address quarter products. while respond first significant the threats just we to is range forward crisis and flexibility XXXX We ago. work a returning more to with will important our international progress clarity and to and year This shareholders. for to [indiscernible] partner continuing be there and few with and our in public key than have stability, a

open With call that, questions. for up we'll the

Countermeasures NARCAN questions, Operator, Williams, up our the of us the open Paul also Head line to the We join Q&A. and invited for let's for Medical business please.

Operator

the question comment from [Operator of comes or Jessica Instructions] JPMorgan. Our Fye line first from

Elias Lenard

Jess. the on This for on is quarter. Nicholas Congrats

NARCAN. on one First

thinking maybe to of You from provide about product could guys any breakdown competition year? you that can sales are maybe of And But that by channel Narcan? some OTC quarter-over-quarter. in how come showing details continued you're color provide kind some of PIP on the growth the on the X that XQ year-over-year, and those additional of segments either also course throughout this generic

Richard Lindahl

-- take Yes, certainly, sales I'll I thanks, remain Nick. one. the majority channel. Rich. first mean, PIP of the is the the So take This I'll from

moving contribution the from with still our rollout, well. channel are the gaining forward traction, from -- but OTC as and it's majority it's is PIP still coming We some with Canada

Paul Williams

think think space And generic the I entrants, additional question this we've the anticipated relative year. and be entering expect competitors there'll I to

that our like retail think support that ability retail the the forecast building side, I the capabilities we to for on channel continue specific have the we year. we through channel the believe the the with NARCANDirect to service and we PIP rest uniquely of partnerships have can the that OTC we're

Joseph Papa

couple just other a comments. future-looking to finally, of put And

points. life-threatening of very Number look we obviously, experience look years what one, NARCAN of and you're about dealing with used. that at the brand situations talking NARCAN importantly, a brand. of with you're when at think I we the NARCAN, couple important is important is And that NARCAN importance the

us we've get to thousands capability, the products. we the built offer, strong manufacturing order that's of make able this Canada, automated distribution team be and that Paul and part sure important of and our allows two, and what we to built compete clearly, capabilities to a we believe then in finally, that an the up around to have that anybody with Number States And has customers space. that United the

some may time. we over see yes, inroads So

More importantly, with we to be opportunities NARCAN still very us have going business. think our the significant that market to growth long-term allow is

Elias Lenard

assumptions provide you more there? to $XXX Great. And I the just that then based the in the guidance million, or can are bit maybe went in other that to just Anthrax a MCM to $XXX raising believe, million pulls color million from on guidance, product Is to the around more and there on clarity $XXX. $XXX pushes

Richard Lindahl

there primary less the our visibility really had the we That's March call, on We less clarity. at driver back was -- commented in as time.

had So range there. CYFENDUS about outcomes Based we lowering by range. raising the as the had, have end able conversations low a visibility we narrow a wider a by better we've potential And this procurement much that on we into were -- where result, we of the the year. range to see

Elias Lenard

facilities. And just could Great. restructuring that provide you you just X Can to one on an those you'll interest seeing more. said some this around that I facilities, X not of about the why color can you chose as some announcement? there that you in any if easy that maybe part you date? But I squeeze any, maybe interest maybe you're was talk strategic that is and know of Rockville additional later. which, details provide decision And mentioned if Understanding Bayview on

Joseph Papa

Yes.

maybe me I'll your start question. picture, to and the with Let get big

was decision we our of that sites in what important most we can areas decision our and still availability. first Winnipeg. have streamlined to that of focus made product We probably think provide future with company foremost, all sure make run thing the picture leaner we the and facilities our Lansing I that's a most on think the the the first and flexibility that, can big is,

the probably I our into So decision. we went was first thing think that

the that treat and help can judgments are opioid total based sure expenses the terms government, expenses, we just the to to we access crisis. our that be the make did so provide at what and in sites made -- saw reduce opportunity, governments obviously important the we but able be U.S. and to looked we we that, to around decisions world the products of the ready other Once on still to as to made what were, to operating

a we site. process. that, sites that site, close we Rockville and when to clear so it saying And Bayview terms but site, offers wind was the be out far. we on that this that sites to in though had more multiple that will going my I that went mention close going as one future, that of was in we the I'm had down, will I down potentially that probably small comments do to And the went through and to hope way that. albeit have that we did say and in we about restrict that say far process through interest really the came make would wanted we've I this what continue

the I of question. think I've got all parts the

Operator

I am over additional the Mr. closing remarks. to conference back time, the no I'd [Operator Instructions] at in questions to queue like showing any this turn for Papa

Joseph Papa

a day. make for path thank in Well, interest forward we this we forward you, multiyear progress and first future Have We in Emergent. look has turnaround thank in your our for more today. down everyone, -- great having us to beyond. say joining much, great to a quarter the We as comment to very on But to look obviously, team and done more transformation. everyone, the you as XXXX having continue job the for

Operator

as with and gentlemen, of PDF We And well during note today accessible all. your of you be the again. and forward website. landing you you speaking on future. to Thank more page to in today's company's participation. call. version available today's Investors version look we the you Goodbye. used a call will the ladies conclude later Thank Please through the webcast as now for slides Thank the archived that, an

Emergent BioSolutions (EBS) 1 May 242024 Q1 Earnings call transcript