GlobeNewswire Inc | Nov 5, 2020 07:30AM EST

November 05, 2020

-- Reports record quarterly revenue of $94.1 million with strong margin expansion -- Overall revenue grew 35% year-over-year, with organic growth of 31% -- Raises revenue guidance to $348-$352 million and overall revenue growth to 29%-30% for full year 2020, representing 23%-24% organic growth -- Completes acquisition of Non-Metallic Solutions and announces agreement to acquire bioprocess systems innovator ARTeSYNBiosolutions

WALTHAM, Mass., Nov. 05, 2020 (GLOBE NEWSWIRE) -- Repligen Corporation (NASDAQ:RGEN), a life sciences company focused on bioprocessing technology leadership, today reported financial results for its third quarter of 2020. Provided in this press release are financial highlights for the three- and nine- month periods ended September 30, 2020, updates to our financial guidance for the fiscal year 2020 and access information for todays webcast and conference call.

Tony J. Hunt, President and Chief Executive Officer said, We are pleased with our momentum during the third quarter, reporting over $94 million in revenue and robust organic growth of 31%. COVID programs accounted for approximately 14% of revenue during the quarter, and approximately 55% of revenue growth. We continued to see strong revenue and order demand as both COVID customers and gene therapy accounts drove accelerated growth across our franchises, with Filtration performing exceptionally well. Direct product orders were up over 100% year-on-year, positioning us well for an excellent finish to 2020 and a strong start to 2021.

Mr. Hunt added, In addition to our strong business performance we were delighted to close on our deal to acquire Non-Metallic Solutions and also sign an agreement to acquire ARTeSYN Biosolutions. These acquisitions broaden and strengthen our systems strategy - where single-use systems and consumables - including flow path assemblies - come together for an enhanced customer offering with meaningful process and yield advantages.

Financial Highlights for the Third Quarter 2020

-- Revenue increased by 35% year-over-year as reported and 31% organically, to reach a quarterly record $94.1 million. -- Gross margin (GAAP) was 57.9%, an increase of 3.1 points, and adjusted gross margin (non-GAAP) was 58.0%, an increase of 1.9 points compared to third quarter of 2019. -- Operating margin (GAAP) was 22.3%, an increase of 10.8 points, and adjusted operating margin (non-GAAP) was 28.6%, an increase of 6.8 points compared to the third quarter of 2019. -- Fully diluted EPS (GAAP) increased to $0.27 compared to $0.03 for the third quarter of 2019, and adjusted fully diluted EPS (non-GAAP) increased to $0.40 compared to $0.26 for the third quarter of 2019.

Financial Details for the Third Quarter and First Nine Months of 2020

REVENUE

-- Total revenue for the third quarter of 2020 increased to $94.1 million compared to $69.4 million for the third quarter of 2019, a year-over-year gain of 35% as reported and 34% at constant currency, with organic growth of 31%. -- Total revenue for the first nine months of 2020 increased to $257.6 million compared to $200.8 million for the first nine months of 2019, a year-over-year gain of 28% as reported and at constant currency, with organic growth of 22%.

GROSS PROFIT and GROSS MARGIN

-- Gross profit (GAAP) for the third quarter of 2020 was $54.4 million, a year-over-year increase of $16.4 million and representing 57.9% gross margin. -- Adjusted gross profit (non-GAAP) for the third quarter of 2020 was $54.6 million, a year-over-year increase of $15.6 million and representing 58% gross margin. -- Gross profit (GAAP) for the first nine months of 2020 was $149.1 million, a year-over-year increase of $37.3 million and representing 57.9% gross margin. -- Adjusted gross profit (non-GAAP) for the first nine months of 2020 was $150.0 million, a year-over-year increase of $35.7 million and representing 58.2% gross margin.

OPERATING INCOME

-- Operating income (GAAP) for the third quarter of 2020 was $21.0 million, an increase of $13 million compared to $8.0 million for the third quarter of 2019. Adjusted operating income (non-GAAP) for the third quarter of 2020 was $26.9 million, an increase of $11.7 million compared to $15.1 million for the third quarter of 2019. -- Operating income (GAAP) for the first nine months of 2020 was $52.4 million, an increase of $22.2 million compared to $30.2 million for the first nine months of 2019. Adjusted operating income (non-GAAP) for the first nine months of 2020 was $70.8 million, an increase of $20.0 million compared to $50.8 million for the first nine months of 2019.

NET INCOME

-- Net income (GAAP) for the third quarter of 2020 was $14.6 million, an increase of $12.9 million compared to $1.7 million for the third quarter of 2019. Adjusted net income (non-GAAP) for the third quarter of 2020 was $21.2 million, an increase of $7.8 million compared to $13.3 million for the third quarter of 2019. -- Net income (GAAP) for the first nine months of 2020 was $40.2 million, an increase of $22.4 million compared to $17.8 million for the first nine months of 2019. Adjusted net income (non-GAAP) for the first nine months of 2020 was $60.4 million, an increase of $18.7 million compared to $41.7 million for the first nine months of 2019.

EARNINGS PER SHARE

-- Earnings per share (GAAP) for the third quarter of 2020 increased to $0.27 on a fully diluted basis, compared to $0.03 for the third quarter of 2019. Adjusted EPS (non-GAAP) for the third quarter of 2020 increased to $0.40 on a fully diluted basis, compared to $0.26 for the 2019 period. -- Earnings per share (GAAP) for the first nine months of 2020 increased to $0.75 on a fully diluted basis, compared to $0.37 for the first nine months of 2019. Adjusted EPS (non-GAAP) for the first nine months of 2020 increased to $1.13 on a fully diluted basis, compared to $0.87 for the first nine months of 2019.

EBITDA

-- EBITDA, a non-GAAP financial measure, increased to $27.4 million for the third quarter of 2020, compared to $8.4 million for the third quarter of 2019. Adjusted EBITDA for the third quarter of 2020 increased to $29.4 million, compared to $17.3 million for the third quarter of 2019. -- EBITDA increased to $71.4 million for the first nine months of 2020, compared to $39.3 million for the first nine months of 2019. Adjusted EBITDA for the first nine months of 2020 increased to $78.0 million, compared to $56.5 million for the first nine months of 2019.

CASH

-- Our cash and cash equivalents at September 30, 2020 were $553.3 million, an increase of $24.9 million from $528.4 million at December 31, 2019.

All reconciliations of GAAP to adjusted (non-GAAP) figures above, as well as EBITDA to adjusted EBITDA, are detailed in the reconciliation tables included later in this press release.

Financial Guidance for 2020

Our financial guidance for the fiscal year 2020 is based on expectations for our existing business and includes the financial impact of our acquisitions of C Technologies (which closed on May 31, 2019), Engineered Molding Technology (which closed on July 13, 2020) and Non-Metallic Solutions, Inc. (which closed on October 20, 2020). The guidance below does not include the impact of our proposed acquisition of ARTeSYN Biosolutions, which is expected to close during the fourth quarter of 2020. The guidance also excludes the impact of potential additional acquisitions and future fluctuations in foreign currency exchange rates.

FISCAL YEAR 2020 GUIDANCE:

-- Total revenue is projected to be in the range of $348-$352 million, an increase from our previous guidance of $332-$340 million. This updated revenue guidance includes approximately $1 million in projected revenue from Non-Metallic Solutions, and reflects overall revenue growth of 29%-30%, with organic revenue growth in the range of 23%-24%. -- COVID programs are expected to account for approximately 10% of revenue. -- Gross margin is expected to be in the range of 57.5%-58.0% on both a GAAP and non-GAAP basis, compared to our previous guidance of 56.5%-57%.

-- Income from operations is expected to be in the range of $66-$68 million on a GAAP basis, an increase from our previous guidance of $59-$62 million. Adjusted income from operations (non-GAAP) is expected to be in the range of $91-$93 million, an increase from our previous guidance of $81-$84 million. -- Net income is expected to be in the range of $47.5-$49.5 million on a GAAP basis, an increase from our previous guidance of $41-$44 million. Adjusted net income (non-GAAP) is expected to be in the range of $75-$77 million, an increase from our previous guidance of $66-$69 million.Our current guidance reflects an adjusted tax rate of 17% on adjusted pre-tax income, compared to our previous guidance of 18%. -- Fully diluted EPS (GAAP) is expected to be in the range of $0.89-$0.93, an increase from our previous guidance of $0.77-$0.82. Adjusted fully diluted EPS (non-GAAP) is expected to be in the range of $1.41-$1.45, an increase from our previous guidance of $1.24-$1.29.

Our non-GAAP guidance for the fiscal year 2020 excludes the following items:

-- $9.2 million estimated acquisition and integration expenses; $0.5 million in cost of product revenue, $0.5 million in R&D and $8.2 million in selling, general and administrative expense (SG&A). -- Expected inventory step-up charges of $0.2 million related to the acquisitions of Engineered Molding Technology and Non-Metallic Solutions. -- $15.8 million estimated intangible amortization expense; $0.3 million in cost of product revenue and $15.6 million in SG&A. -- $11.0 million of non-cash interest expense (Other income (expense)) related to our convertible debt notes.

Our non-GAAP guidance for the fiscal year 2020 includes:

-- An income tax expense of $8.6 million, representing the tax impact of acquisition and integration, inventory step-up, and intangible amortization expenses, as well as non-cash interest expenses related to our convertible debt notes.

All reconciliations of GAAP to adjusted (non-GAAP) guidance are detailed in the tables included later in this press release.

Conference CallRepligen will host a conference call and webcast today, November 5, 2020, at 8:30 a.m. EST, to discuss third quarter 2020 financial results and corporate developments. The conference call will be accessible by dialing toll-free (844) 763-8274 for domestic callers or (412) 717-9224 for international callers. No passcode is required for the live call. In addition, a webcast will be accessible via the Investor Relations section of the Companys website. Both the conference call and webcast will be archived for a period of time following the live event. The replay dial-in numbers are (877) 344-7529 from the U.S., (855) 669-9658 from Canada and (412) 317-0088 for international callers. Replay listeners must provide the passcode 10149396.

Non-GAAP Measures of Financial Performance To supplement our financial statements, which are presented on the basis of U.S. generally accepted accounting principles (GAAP), the following non-GAAP measures of financial performance are included in this release: revenue growth rate at constant currency, adjusted gross profit and adjusted gross margin, adjusted income from operations and adjusted operating margin, earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted EBITDA, adjusted net income, adjusted net income per share, adjusted earnings per diluted share (EPS), adjusted cost of sales, adjusted research & development expense, adjusted SG&A, adjusted income tax expense and adjusted income tax rate. The Company provides organic revenue growth rates in constant currency to exclude the impact of both foreign currency translation, and the impact of acquisition revenue for current year periods that have no prior year comparable, in order to facilitate a comparison of its current revenue performance to its past revenue performance. The Company provides revenue growth rates in constant currency in order to facilitate a comparison of its current revenue performance to its past revenue performance. To calculate revenue growth rates in constant currency, the Company converts actual net sales from local currency to U.S. dollars using constant foreign currency exchange rates in the current and prior period.

The Companys non-GAAP financial results and/or non-GAAP guidance exclude the impact of: acquisition and integration costs, inventory step-up charges and intangible amortization costs related to the Companys acquisitions, as well as non-cash interest expenses related to the Companys convertible debt, and the related impact on tax of non-GAAP charges. These costs are excluded because management believes that such expenses do not have a direct correlation to future business operations, nor do the resulting charges recorded accurately reflect the performance of our ongoing operations for the period in which such charges are recorded.

A reconciliation of GAAP to adjusted (non-GAAP) financial measures, as well as EBITDA to adjusted EBITDA, is included as an attachment to this press release. When analyzing the Companys operating performance and guidance, investors should not consider non-GAAP measures as substitutable for the comparable financial measures prepared in accordance with GAAP.

About Repligen CorporationRepligen Corporation is a global life sciences company that develops and commercializes highly innovative bioprocessing technologies and systems that increase efficiencies in the process of manufacturing biological drugs. We are inspiring advances in bioprocessing for the customers we serve; primarily biopharmaceutical drug developers and contract development and manufacturing organizations (CDMOs) worldwide. Our corporate headquarters are located in Waltham, MA (USA), and we have additional administrative and manufacturing operations in Rancho Dominguez, CA; Marlborough and Auburn, MA; Bridgewater, NJ; Clifton Park, NY; Dallas, TX; Ravensburg, Germany; Breda, the Netherlands and Lund, Sweden.

The followingconstitutesaSafeHarborstatementunderthePrivateSecuritiesLitigationReformActof1995:Thispressreleasecontainsforward-lookingstatements,whicharemadepursuanttothesafeharborprovisionsofSection27AoftheSecuritiesActof1933,asamended,andSection21EoftheSecuritiesExchangeActof1934,asamended.Investors are cautioned that statements in this press release which are not strictly historical statements, including, without limitation, express or implied statements or guidance regarding current or future financial performance and position, including cash and investment position, demand in the markets in which we operate, the expected performance of our business, the expected performance of the C Technologies, Engineered Molding Technology and Non-Metallic Solutions businesses, the expected closing of the acquisition of ARTeSYNBiosolutions,the expected performance and success of our strategic partnerships, managements strategy, plans and objectives for future operations or acquisitions, product development and sales, selling, general and administrative expenditures, intellectual property, development and manufacturing plans, availability of materials and product and adequacy of capital resources, our financing plans, and the projected impact of, and response to, the COVID-19 coronavirus pandemic on our business and on the U.S. and global economies constitute forward-looking statements identified by words like believe, expect, may, will, should, seek, anticipate, or could and similar expressions. Such forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated, including, without limitation, risks associated with the following: the effect of the COVID-19 coronavirus pandemic, including mitigation efforts and economic effects, on our business operations and the operations of our customers and suppliers; the ultimate impact of the COVID-19 coronavirus pandemic on our business or financial results; our ability to successfully grow our bioprocessing business, including as a result of acquisition, commercialization or partnership opportunities; our ability to successfully integrate any acquisitions, our ability to develop and commercialize products and the market acceptance of our products; our ability to integrate the C Technologies, Engineered Molding Technology and Non-Metallic Solutions businesses successfully into our business and achieve the expected benefits of the acquisitions; reduced demand for our products that adversely impacts our future revenues, cash flows, results of operations and financial condition; our ability to compete with larger, better financed bioprocessing, pharmaceutical and biotechnology companies; our compliance with all U.S. Food and Drug Administration and EMEA regulations; our volatile stock price; and other risks detailed in Repligens Annual Report on Form 10-K for the year ended December 31, 2019 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 on file with the Securities and Exchange Commission and the other reports that Repligen periodically files with the Securities and Exchange Commission.ActualresultsmaydiffermateriallyfromthoseRepligencontemplatedbytheseforward-lookingstatements.Theseforward-lookingstatementsreflectmanagementscurrentviewsandRepligendoesnotundertaketoupdateanyoftheseforward-looking statements to reflect a change in its views or events or circumstances that occur after the datehereofexcept as required bylaw.

Repligen Contact: Sondra S. NewmanGlobal Head of Investor Relations(781) 419-1881investors@repligen.com

REPLIGEN CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited, amounts in thousands, except share and per share data) Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Revenue: Product $ 94,029 $ 69,419 $ 257,521 $ 200,701 revenueRoyalty and 31 26 91 70 other revenueTotal revenue 94,060 69,445 257,612 200,771 Costs and expenses:Cost ofproduct 39,626 31,425 108,471 88,978 revenueResearch and 4,422 5,427 13,460 14,278 developmentSelling,general and 29,051 24,629 83,277 67,326 administrative 73,099 61,481 205,208 170,582 Income from 20,961 7,964 52,404 30,189 operationsInvestment 82 1,898 1,699 3,616 incomeLoss onextinguishment - (5,650 ) - (5,650 )of debtInterest (3,052 ) (2,857 ) (9,032 ) (6,326 )expenseOther(expense) (248 ) 316 (632 ) (23 )income, netIncome before 17,743 1,671 44,439 21,806 income taxesIncome tax 3,191 12 4,211 3,999 provisionNet income $ 14,552 $ 1,659 $ 40,228 $ 17,807 Earnings per share:Basic $ 0.28 $ 0.03 $ 0.77 $ 0.38 Diluted $ 0.27 $ 0.03 $ 0.75 $ 0.37 Weightedaverage shares outstanding:Basic 52,545,100 50,851,623 52,341,037 47,086,779 Diluted 53,468,658 51,809,289 53,299,544 47,929,581 Balance Sheet September 30, December 31, Data: 2020 2019Cash, cashequivalents $ 553,302 $ 528,392 and marketablesecuritiesWorking 645,744 593,515 capitalTotal assets 1,476,316 1,400,113 Long-term 300,462 292,032 obligationsAccumulated 46,071 5,843 earningsStockholders' 1,124,870 1,059,768 equity

REPLIGEN CORPORATIONRECONCILIATION OF GAAP INCOME FROM OPERATIONSTO NON-GAAP (ADJUSTED) INCOME FROM OPERATIONS(Unaudited, amounts in thousands) Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 GAAP INCOME FROM $ 20,961 $ 7,964 $ 52,404 $ 30,189 OPERATIONS ADJUSTMENTS TOINCOME (LOSS) FROM OPERATIONS: Acquisition and 1,849 2,953 6,536 9,573 integration costs Intangible 3,925 3,900 11,677 9,562 amortization Inventory step-up 144 314 144 1,483 charges ADJUSTED INCOME $ 26,879 $ 15,131 $ 70,761 $ 50,807 FROM OPERATIONS REPLIGEN CORPORATIONRECONCILIATION OF GAAP NET INCOME TO NON-GAAP (ADJUSTED) NET INCOME(Unaudited, amounts in thousands) Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 GAAP NET INCOME $ 14,552 $ 1,659 $ 40,228 $ 17,807 ADJUSTMENTS TO NET INCOME: Acquisition and 1,849 2,953 6,536 10,074 integration costs Inventory step-up 144 314 144 1,483 charges Intangible 3,925 3,900 11,677 9,562 amortization Loss on extinguishment - 5,650 - 5,650 of debt Non-cash interest 2,759 2,631 8,174 4,863 expense Tax effect of non-GAAP (2,072 ) (3,781 ) (6,334 ) (7,742 ) charges ADJUSTED NET INCOME $ 21,157 $ 13,326 $ 60,425 $ 41,697 REPLIGEN CORPORATIONRECONCILIATION OF GAAP NET INCOME PER SHARE TONON-GAAP (ADJUSTED) NET INCOME PER SHARE(Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 GAAP NET INCOME PER $ 0.27 $ 0.03 $ 0.75 $ 0.37 SHARE - DILUTED ADJUSTMENTS TO NETINCOME PER SHARE - DILUTED: Acquisition and 0.03 0.06 0.12 0.21 integration costs Inventory step-up 0.00 0.01 0.00 0.03 charges Intangible 0.07 0.08 0.22 0.20 amortization Loss on extinguishment - 0.11 - 0.12 of debt Non-cash interest 0.05 0.05 0.15 0.10 expense Tax effect of non-GAAP (0.04 ) (0.07 ) (0.12 ) (0.16 ) charges ADJUSTED NET INCOME 0.40 $ 0.26 $ 1.13 $ 0.87 PER SHARE - DILUTED Totals may not add due to rounding. REPLIGEN CORPORATIONRECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA(Unaudited, amounts in thousands) Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 GAAP NET INCOME $ 14,552 $ 1,659 $ 40,228 $ 17,807 ADJUSTMENTS: Investment (82 ) (1,898 ) (1,699 ) (3,616 ) Income Interest 3,052 2,857 9,032 6,326 Expense Tax Provision 3,191 12 4,211 3,999 Depreciation 2,757 1,810 7,820 5,147 Amortization^ 3,953 3,928 11,760 9,644 (1) EBITDA 27,422 8,368 71,353 39,307 OTHER ADJUSTMENTS: Acquisition and 1,849 2,953 6,536 10,074 integration costs Loss on extinguishment - 5,650 - 5,650 of debt Inventory step-up 144 314 144 1,483 charges ADJUSTED EBITDA $ 29,415 $ 17,285 $ 78,033 $ 56,514 (1 ) Includes amortization of milestone payments in accordance with GAAP of $28 and $83 for the three- and nine-months ended September 30, 2020 and 2019. REPLIGEN CORPORATIONRECONCILIATION OF GAAP COST OF SALES TO NON-GAAP (ADJUSTED) COST OF SALES(Unaudited, amounts in thousands) Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 GAAP COST OF SALES $ 39,626 $ 31,425 $ 108,471 $ 88,978 ADJUSTMENT TO COST OF SALES: Acquisition and (3 ) (519 ) (468 ) (670 ) integration costs Inventory step-up (144 ) (314 ) (144 ) (1,483 ) charges Intangible - (128 ) (254 ) (392 ) amortization ADJUSTED COST OF $ 39,479 $ 30,464 $ 107,605 $ 86,433 SALES REPLIGEN CORPORATIONRECONCILIATION OF GAAP R&D EXPENSE TO NON-GAAP (ADJUSTED) R&D EXPENSE(Unaudited, amounts in thousands) Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 GAAP R&D $ 4,422 $ 5,427 $ 13,460 $ 14,278 ADJUSTMENT TO R&D: Acquisition and (1 ) (278 ) (472 ) (405 ) integration costs ADJUSTED R&D $ 4,421 $ 5,149 $ 12,988 $ 13,873 REPLIGEN CORPORATIONRECONCILIATION OF GAAP SG&A EXPENSE TO NON-GAAP (ADJUSTED) SG&A EXPENSE(Unaudited, amounts in thousands) Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 GAAP SG&A EXPENSE $ 29,051 $ 24,629 $ 83,277 $ 67,326 ADJUSTMENTS TO SG&A EXPENSE: Acquisition and (1,845 ) (2,156 ) (5,596 ) (8,499 ) integration costs Intangible (3,925 ) (3,772 ) (11,425 ) (9,170 ) amortization ADJUSTED SG&A $ 23,280 $ 18,701 $ 66,257 $ 49,657 EXPENSE

REPLIGEN CORPORATIONRECONCILIATION OF GAAP NET INCOME GUIDANCE TO ADJUSTED (NON-GAAP NET INCOMEGUIDANCE) (in thousands) Twelve months ending December 31, 2020 Low End High EndGUIDANCE ON NET INCOME $ 47,500 $ 49,500 ADJUSTMENTS TO GUIDANCE ON NET INCOME: Acquisition and integration costs 9,167 9,167 Anticipated pre-tax amortization of acquisition-related intangible 15,842 15,842 assets Inventory step-up costs 172 172 Non-cash interest expense 10,966 10,966 Tax effect of non-GAAP charges (8,630 ) (8,630 ) Guidance rounding adjustment (17 ) (17 )GUIDANCE ON ADJUSTED NET INCOME $ 75,000 $ 77,000 REPLIGEN CORPORATIONRECONCILIATION OF GAAP NET INCOME PER SHARE GUIDANCE TOADJUSTED (NON-GAAP) NET INCOME PER SHARE GUIDANCE Twelve months ending December 31, 2020 Low End High EndGUIDANCE ON NET INCOME PER SHARE - DILUTED $ 0.89 $ 0.93 ADJUSTMENTS TO GUIDANCE ON NET INCOME PER SHARE - DILUTED: Acquisition and integration costs $ 0.17 $ 0.17 Anticipated pre-tax amortization of acquisition-related intangible $ 0.30 $ 0.30 assets Inventory step-up costs $ 0.00 $ 0.00 Non-cash interest expense $ 0.21 $ 0.21 Tax effect of non-GAAP charges ($ 0.16 ) ($ 0.16 ) Guidance rounding adjustment ($ 0.00 ) $ 0.00 GUIDANCE ON ADJUSTED NET INCOME PER SHARE - $ 1.41 $ 1.45 DILUTED Totals may not add due to rounding.