GlobeNewswire Inc | Jul 30, 2020 08:10AM EDT

July 30, 2020

RECORDATI ANNOUNCES POSITIVE FIRST HALF 2020 RESULTS. REVENUES +2.3%, EBITDA +11.4%, ADJUSTED NET INCOME +16.8%

-- Consolidated revenues 760.2 million, +2.3%. -- EBITDA (1) 311.1 million, +11.4% -- Operating income 261.5 million, +7.8% -- Net income 196.9 million, + 13.0% -- Adjusted net income (2) 225.6 million, +16.8% -- Net financial position (3): net debt of 922.4 million; 902.7 million at 31 December 2019 -- Shareholders equity 1,242.0 million -- Isturisa (osilodrostat) Launched in the U.S.A., France and Germany. Filed for approval in Japan. -- Full year 2020 targets updated



Milan, 30 July 2020 The Board of Directors of Recordati S.p.A. approved the Groups consolidated results for the first half 2020 prepared in accordance with the International Financial Reporting Standards (IAS/IFRS) and in particular as per IAS 34 requirements for interim reporting. These financial statements will be available today at the companys offices and on the companys website (www.recordati.com) and can also be viewed on the authorized storage system 1Info (www.1Info.it). The independent auditors report on the consolidated condensed half-year financial statements will be available within the legal deadline at the companys offices and on the companys website (www.recordati.com) and can also be viewed on the authorized storage system 1Info (www.1Info.it).



Financial highlights



-- Consolidated revenues in the first half of 2020 are 760.2 million, up by 2.3% compared to the same period of the preceding year. International sales grow by 4.0%. Included is revenue of 32.8 million related to Signifor, Signifor LAR, consolidated starting 24 October 2019, and Isturisa. -- EBITDA (1) is 311.1 million, or 40.9% of sales (37.6% in the first half of 2019), an increase of 11.4%. EBITDA excludes non-recurring costs related to the COVID-19 epidemiological emergency of 4.0 million, which comprise mainly donations to hospitals. -- Operating income, at 34.4% of sales, is 261.5 million, an increase of 7.8% over the same period of the preceding year. -- Net income, at 25.9% of sales, is 196.9 million, up 13.0% over the first half of 2019, thanks to increase in operating income, lower financial expenses and reduction of the effective tax rate. Adjusted net income (2), the additional performance measure introduced this year in order to provide information in line with best practice in the sector, at 29.7% of sales is 225.6 million, an increase of 16.8% over the first half of 2019. -- Net financial position (3) at 30 June 2020 records a net debt of 922.4 million compared to net debt of 902.7 million at 31 December 2019. During the period milestones of $ 80,0 million were paid to Novartis following the European and U.S. approval of Isturisa, own shares were purchased for a total disbursement, net of disposals for the exercise of stock options, of 22.5 million and dividends were paid for a total of 110.4 million. Net of these effects cash generation during the period was of around 189 million. Shareholders equity is 1,242.0 million.

(1) Net income before financial (income) expense, provision for taxes, depreciation, amortization and write down of property, plant and equipment, intangible assets and goodwill, and non-recurring items.(2) Net income excluding amortization and write-down of intangible assets (except software) and goodwill, and non-recurring items, net of tax effects.(3) Cash and short-term financial investments less bank overdrafts and loans which include the measurement at fair value of hedging derivatives.

Corporate development news

In the month of February the marketing authorizations for Signifor and Signifor LAR in the U.S. were transferred to Recordati Rare Diseases Inc. and direct marketing of these products on this market started.

Also, and as per the agreement with Novartis, the marketing authorizations for Isturisa were transferred to Recordati Rare Diseases both in the United States and in Europe, in March and April respectively, and the product was launched with initial sales in the second quarter in the U.S. and in France. Furthermore, in March, the Japanese New Drug Application (JNDA) was submitted to the Ministry of Health, Labour and Welfare seeking marketing approval for osilodrostat.

The active substance of Isturisa is osilodrostat, a cortisol synthesis inhibitor. Osilodrostat works by inhibiting 11-beta-hydroxylase, an enzyme responsible for the final step of cortisol biosynthesis in the adrenal gland. The benefits of Isturisa, demonstrated in the LINC 3 clinical trial and now also confirmed by the LINC 4 trial, are its ability to control or normalise cortisol levels in adult CS patients with a manageable safety profile, making this product a valuable treatment option for patients with Cushings syndrome. Both the European Commission and the FDA confirmed the orphan drug status of Isturisa and granted approval respectively for the treatment of endogenous Cushings syndrome in adults (in EU) and for the treatment of patients with Cushings disease, for whom pituitary surgery is not an option or has not been curative (in USA).

Management Comments

Despite the first half having been impacted by the COVID-19 epidemiological emergency, net revenue increases and both operating income and net income grow significantly and are in line with expectations thanks to the positive contribution of the new products and the reduction of expenses, stated Andrea Recordati, CEO. The second quarter of 2020 saw an intensification of the impact of the COVID-19 pandemic in all geographical areas in which the Group operates. The restrictions on the movement of people, transport, production, commerce, were progressively reinforced. Although pharmaceutical operations were allowed to continue in order to ensure the availability of drugs for the population, the restrictions inevitably affected our markets of reference mainly due to fewer visits to doctors and diagnostic procedures, a reduction of minor surgeries as well as lower incidence of mild infectious disease resulting from the diminished circulation and interaction between people, continued Andrea Recordati. While complying with all the measures necessary to ensure the health safety of its personnel, Recordati has continued its production and distribution activities without interruption and has adopted measures to guarantee the continued availability on the market of its products and enable the continued growth of the Group.

Finally, Andrea Recordati said, Based on an assumed gradual return to more normal operations, we expect to achieve, for the full year 2020, revenues of around 1,500 million, below estimates issued at the beginning of the year, EBITDA(1) of between 580 and 590 million and adjusted net income(2) of between 408 and 418 million, in line with previous plan estimates, thus confirming profit margin growth over the previous year. Finally, based on the encouraging initial sales of Isturisa, mainly in the USA, we estimate that this product could reach, at peak, total sales of between 300 and 350 million with potential further upside from expansion of indication to Cushings syndrome in the USA and expansion in new territories, confirming its importance for our future growth.

Conference call

Recordati will be hosting a conference calltoday 30 July at 4:00 pm Italian time (3:00 pm London time, 10:00 am New York time). The dial-in numbers are:

Italy +39 02 8058811, toll free 800 213 858UK +44 1 212818003, toll free 800 0156384USA +1 718 7058794, toll free 855 2656959 France +33 170918703 Germany +49 69 17415713

Callers are invited to dial-in 10 minutes before conference time. If conference operator assistance is required during the connection, please digit * followed by 0 or call +39 02 8061371. A recording of the conference call will be placed on the website www.recordati.com.

A set of slides which will be referred to during the call will be available on our website www.recordati.com under Investors/Company Presentations.

Recordati, established in 1926, is an international pharmaceutical group, listed on the Italian Stock Exchange (Reuters RECI.MI, Bloomberg REC IM, ISIN IT 0003828271), with a total staff of more than 4,300, dedicated to the research, development, manufacturing and marketing of pharmaceuticals. Headquartered in Milan, Italy, Recordati has operations throughout the whole of Europe, including Russia, Turkey, North Africa, the United States of America, Canada, Mexico, some South American countries, Japan and Australia. An efficient field force of medical representatives promotes a wide range of innovative pharmaceuticals, both proprietary and under license, in a number of therapeutic areas including a specialized business dedicated to treatments for rare diseases. Recordati is a partner of choice for new product licenses for its territories. Recordati is committed to the research and development of new specialties with a focus on treatments for rare diseases. Consolidated revenue for 2019 was 1,481.8 million, operating income was 465.3 million and net income was 368.9 million.

For further information:

Recordati website: www.recordati.com

Investor Relations

Media Relations Marianne Tatschke Studio Noris Morano (39)0248787393 (39)0276004736, (39)0276004745e-mail: investorelations@recordati.it e-mail: norismorano@studionorismorano.com



Statements contained in this release, other than historical facts, are "forward-looking statements" (as such term is defined in the Private Securities Litigation Reform Act of 1995). These statements are based on currently available information, on current best estimates, and on assumptions believed to be reasonable. This information, these estimates and assumptions may prove to be incomplete or erroneous, and involve numerous risks and uncertainties, beyond the Companys control. Hence, actual results may differ materially from those expressed or implied by such forward-looking statements. All mentions and descriptions of Recordati products are intended solely as information on the general nature of the companys activities and are not intended to indicate the advisability of administering any product in any particular instance.

RECORDATI GROUPSummary of consolidated results prepared in accordance with the International Financial Reporting Standards (IFRS) (thousands of )

INCOME STATEMENT First half First half Change % 2020 2019REVENUE 760,192 743,253 2.3Cost of sales (211,754) (223,298) (5.2)GROSS PROFIT 548,438 519,955 5.5Selling expenses (174,196) (183,884) (5.3)Research and development expenses (71,242) (59,757) 19.2General & administrative expenses (36,684) (34,598) 6.0Other income (expenses), net (4,806) 843 n.s.OPERATING INCOME 261,510 242,559 7.8Financial income (expenses), net (7,083) (10,922) (35.1)PRE-TAX INCOME 254,427 231,637 9.8Provision for income taxes (57,484) (57,363) 0.2NET INCOME 196,943 174,274 13.0Attributable to: Equity holders of the parent 196,918 174,252 13.0Non-controlling interests 25 22 13.6EARNINGS PER SHARE Basic ^(1) ? 0.959 ? 0.853 12.4Diluted ^(2) ? 0.942 ? 0.833 13.1ADJUSTED NET INCOME ^(3) 225,568 193,137 16.8EBITDA ^(4) 311,091 279,313 11.4

(1) Earnings per share (EPS) are based on average shares outstanding duringeach year, 205,384,957 in 2020 and 204,317,687 in 2019, net of average treasurystock which amounted to 3,740,199 shares in 2020 and to 4,807,469 shares in2019.(2) Diluted earnings per share is calculated taking into account stock optionsgranted to employees.(3) Net income excluding amortization and write-down of intangible assets(except software) and goodwill, and non-recurring items, net of tax effects.(4) Net income before financial (income) expense, provision for taxes,depreciation, amortization and write down of property, plant and equipment,intangible assets and goodwill, and non-recurring items.

COMPOSITION OF REVENUE First half First half Change % 2020 2019Total revenue 760,192 743,253 2.3Italy 148,485 155,097 (4.3)International 611,707 588,156 4.0

Pending completion of independent audits.RECORDATI GROUPSummary of consolidated results prepared in accordance with the International Financial Reporting Standards (IFRS) (thousands of )

INCOME STATEMENT Second quarter Second quarter Change % 2020 2019REVENUE 330,957 360,263 (8.1)Cost of sales (86,243) (106,832) (19.3)GROSS PROFIT 244,714 253,431 (3.4)Selling expenses (74,342) (89,321) (16.8)Research and development expenses (36,314) (30,605) 18.7General & administrative expenses (18,315) (17,344) 5.6Other income (expenses), net (2,659) 388 n.s.OPERATING INCOME 113,084 116,549 (3.0)Financial income (expenses), net (4,187) (6,931) (39.6)PRE-TAX INCOME 108,897 109,618 (0.7)Provision for income taxes (23,149) (27,456) (15.7)NET INCOME 85,748 82,162 4.4ADJUSTED NET INCOME ^(1) 100,393 91,773 9.4EBITDA ^(1) 138,219 135,374 2.1

(1) Net income excluding amortization and write-down of intangible assets (except software) and goodwill, and non-recurring items, net of tax effects.

(2) Net income before financial (income) expense, provision for taxes, depreciation, amortization and write down of property, plant and equipment, intangible assets and goodwill, and non-recurring items.

COMPOSITION OF REVENUE Second quarter Second quarter Change % 2020 2019Total revenue 330,957 360,263 (8.1)Italy 66,949 72,874 (8.1)International 264,008 287,389 (8.1)

Quarterly results not subject to audits

RECORDATI GROUPSummary of consolidated results prepared in accordance with the International Accounting Standards and International Financial Reporting Standards (IFRS)(thousands of )

ASSETS 30.06.2020 31.12.2019 Property, plant and equipment 131,528 133,342Intangible assets 1,144,505 1,161,760Goodwill 569,696 577,973Equity investments 31,153 38,566Non-current receivables 16,436 16,426Deferred tax assets 76,179 71,513TOTAL NON-CURRENT ASSETS 1,969,497 1,999,580 Inventories 255,095 226,885Trade receivables 285,867 296,961Other receivables 56,697 79,949Other current assets 10,301 7,683Fair value of hedging derivatives (cash flow hedge) 13,920 9,949Short-term financial investments, cash and cash 218,392 187,923equivalentsTOTAL CURRENT ASSETS 840,272 809,350TOTAL ASSETS 2,809,769 2,808,930

Pending completion of independent audits.

RECORDATI GROUPSummary of consolidated results prepared in accordance with the International Accounting Standards and International Financial Reporting Standards (IFRS)(thousands of )

EQUITY AND LIABILITIES 30.06.2020 31.12.2018 Share capital 26,141 26,141Capital in excess of par value 83,719 83,719Treasury stock (101,350) (93,480)Hedging reserve (2,340) (5,357)Translation reserve (169,967) (146,866)Other reserves 56,217 64,651Retained earnings 1,152,408 999,708Net income for the period 196,918 368,825Interim dividend 0 (98,764)Equity attributable to the holders of the Parent 1,241,746 1,198,577Non-controlling interests 259 234TOTAL EQUITY 1,242,005 1,198,811 Loans due after one year 971,603 937,344Employees? termination pay 20,394 20,557Deferred tax liabilities 42,041 43,172Other non-current liabilities 21,116 22,292TOTAL NON-CURRENT LIABILITIES 1,055,154 1,023,365 Trade payables 155,585 175,481Other payables 99,457 185,706Tax liabilities 33,622 21,094Other current liabilities 10,944 12,543Provisions 16,705 17,933Fair value of hedging derivatives (cash flow hedge) 13,198 10,788Loans due within one year 176,604 149,817Bank overdrafts and short-term loans 6,495 13,392TOTAL CURRENT LIABILITIES 512,610 586,754TOTAL EQUITY AND LIABILITIES 2,809,769 2,808,930

Pending completion of independent audits.

DECLARATION BY THE MANAGER RESPONSIBLE FOR PREPARING THE COMPANYS FINANCIAL REPORTS

The manager responsible for preparing the companys financial reports Luigi La Corte declares, pursuant to paragraph 2 of Article 154-bis of the Consolidated Law on Finance, that the accounting information contained in this press release corresponds to the document results, books and accounting records.

Attachment

-- First half 2020 results