Repligen Reports Fourth Quarter 2016 Financial Results, Provides Guidance for 2017

Repligen Corporation (NASDAQ:RGEN), a life sciences company focused on bioprocessing technology leadership, today reported financial results for the fourth quarter ended December 31, 2016. Detailed in this press release are the Company’s performance highlights for the quarter and full year periods, followed by initial financial guidance for the year 2017 and access information for today’s webcast and conference call.Tony J. Hunt, President and Chief Executive Officer said, “2016 was another strong year for Repligen, surpassing a $100M revenue milestone to deliver 25% growth in sales and a 20% increase in adjusted operating income. We continued to execute on our plans to grow and expand our bioprocessing product offering, increasing our direct product sales to represent approximately 50% of 2016 revenue. We strengthened our filtration and chromatography businesses through new product launches and acquisitions, positioning us well as single-use and continuous processing technologies gain further market traction. We finished the year with fourth quarter revenue ahead of our expectations, and we anticipate another double-digit revenue growth year in 2017 as we leverage our investments to continue delivering strong growth and earnings to our shareholders.”
Financial Highlights for the Fourth Quarter and Full Year of 2016
REVENUERevenue for the fourth quarter of 2016 increased to $25.6 million compared to $21.4 million for the fourth quarter of 2015, a year-over-year gain of 19% as recorded, or 21% at constant currency. Revenue for the full year 2016 was $104.5 million, an increase of 25% as recorded, or 26% at constant currency.GROSS PROFITGross profit for the fourth quarter of 2016 was $13.4 million, a year-over-year increase of $2.1 million and representing 52.5% gross margin. This compares to fourth quarter of 2015 gross profit of $11.3 million and 52.7% gross margin. Gross profit for the full year 2016 was $57.4 million, a year-over-year increase of $9.1 million and representing 54.9% gross margin. This compares to full year 2015 gross profit of $48.3 million and 57.8% gross margin.OPERATING INCOME
Operating income (GAAP) for the fourth quarter of 2016 was $2.9 million, a year-over-year increase of $1.5 million or 104%. Operating income (GAAP) for the full year 2016 was $16.0 million, an increase of $2.2 million or 16% compared to full year 2015.
Adjusted operating income (non-GAAP) for the fourth quarter of 2016 was $3.8 million, a year-over-year increase of $0.4 million or 11%. For the full year 2016, adjusted operating income was $21.4 million, a year-over-year increase of $3.6 million or 20%.
–  Fourth quarter of 2016 adjustments to operating income totaled $0.9 million, as a result of the $0.9 million of expense related to our December 2016 acquisition of TangenX Technology Corporation (“TangenX”). In the fourth quarter of 2015, adjustments to operating income totaled $2.0 million of contingent consideration expense.
–  Full year 2016 adjustments to operating income totaled $5.5 million, including $0.9 million of TangenX acquisition expense, $1.3 million of Atoll GmBH (“Atoll”) acquisition expense, and $3.2 million of contingent consideration expense. For the full year 2015, adjustments to operating income totaled $4.1 million of contingent consideration expense.
–  Because the contingent consideration measurement periods related to previous acquisitions concluded in 2016, we do not expect to incur contingent consideration expense in 2017.
TAXIncome tax for the fourth quarter of 2016 was impacted by a non-recurring non-cash tax benefit totaling $4.3 million, predominantly a reversal of a valuation allowance triggered by the acquisition of TangenX.  As a result, we reported a net income tax benefit of $3.5 million, compared to an income tax expense of $0.9 million for the fourth quarter of 2015. For the full year 2016, we reported a net income tax expense of $11,000 compared to income tax expense of $4.1 million for the year 2015.NET INCOMENet income (GAAP) for the fourth quarter of 2016 was $5.0 million, a year-over-year increase of $4.8 million compared to net income of $0.3 million for fourth quarter of 2015. For the full year 2016, GAAP net income was $11.7 million, a year-over-year increase of $2.3 million.
Adjusted net income (non-GAAP) for the fourth quarter of 2016 was $2.6 million, a year-over-year increase of $0.4 million or 16%. For the full year 2016, adjusted net income was $15.1 million, a year-over-year increase of $1.7 million or 13%.EARNINGS PER SHAREEarnings per share (GAAP) for the fourth quarter of 2016 were $0.15 on a fully diluted basis, compared to $0.01 for the fourth quarter of 2015. For the full year 2016, earnings per share (EPS) were $0.34 compared to $0.28 for the year 2015. The above mentioned non-recurring non-cash tax benefit contributed $0.12 to EPS for the fourth quarter and $0.13 for the full year 2016 periods.
Adjusted EPS (non-GAAP) for the fourth quarter of 2016 was $0.08 per fully diluted share, a $0.01 increase from $0.07 for the 2015 period. For the full year 2016, adjusted EPS was $0.44, a $0.04 increase from $0.40 for the year 2015.Adjusted net income and adjusted EPS figures, detailed in the reconciliation tables below, exclude the impact of the above mentioned TangenX acquisition costs, Atoll acquisition costs, contingent consideration expenses, and the non-cash portion of debt-related interest expense, as well as the non-recurring tax valuation allowance benefit triggered by the TangenX acquisition.EBITDAEBITDA, a non-GAAP financial measure, for the fourth quarter of 2016 was $4.5 million, a 96% increase from $2.3 million for the fourth quarter of 2015. For the full year 2016, EBITDA was $20.4 million, an increase of 14% from $17.9 million for the year 2015.
Adjusted EBITDA for the fourth quarter of 2016 was $5.4 million, a 26% increase from $4.3 million for the fourth quarter of 2015. For the full year 2016, adjusted EBITDA was $25.9 million, an increase of 18% from $22.0 million for the full year 2015.CASHOur cash, cash equivalents and marketable securities at December 31, 2016 were $141.8 million.
Financial Guidance for 2017
Based on our current projections, we are providing financial guidance for the year 2017. This guidance is based on expectations for our existing business and does not include the financial impact of potential new acquisitions or future fluctuations in foreign currency exchange rates. Beginning in 2017, we will be excluding intangible amortization costs from our non-GAAP reporting, on the basis that our recent acquisitions and potential new acquisitions are creating higher levels of this non-cash non-operational expense. Intangible amortization was not excluded in our 2016 non-GAAP reporting. We will therefore be providing restated GAAP to non-GAAP reconciliation tables for 2016 periods, starting with our first quarter of 2017 report and forward. We expect intangible amortization expense of approximately $3.0 million for the year 2017, compared to actual intangible amortization expense of $2.1 million in 2016.2017 Guidance:Total revenue for the year 2017 is projected to be $121-$126 million, reflecting revenue growth of 16%-21%, or 18%-23% at constant currency.GAAP gross margin for the year 2017 is expected to be 55%-56% and adjusted gross margin is expected to be 55.5%-56.5%.GAAP income from operations for the year 2017 is expected to be $24-$26 million and adjusted income is expected to be $27-$29 million.Debt-related interest expense for the year 2017 is expected to be $6.4 million on a GAAP basis and $2.4 million on an non-GAAP basis.GAAP income tax for the year 2017 is expected to be $5.5-$6.0 million and adjusted income tax is expected to be $6.0-$6.5 million.GAAP net income for the year 2017 is expected to be $11-$13 million and adjusted net income for the year 2017 is expected to be $18-$20 million, which includes the cash portion ($2.4 million) of debt-related interest expense.Fully diluted GAAP EPS for the year 2017 is expected to be in the range of $0.35-$0.40 and adjusted EPS is expected to be $0.54-$0.59.EBITDA and adjusted EBITDA for the year 2017 is expected to be in the range of $31-$33 million.Our non-GAAP guidance excludes the following items:$3.0 million estimated intangible amortization expense; $0.6 million in cost of goods and $2.5 million in G&A.$0.2 million estimated acquisition expenses (G&A) associated with the TangenX acquisition.$4.0 million of non-cash interest expense (Other Income/Expense) related to our debt financing.An increase of $0.4 million in income tax expense, due to the aforementioned reduction of intangible amortization expense.
Conference Call
Repligen will host a conference call and webcast today, February 22, 2017, at 8:30 a.m. EST, to discuss fourth quarter and full year 2016 financial results and corporate developments. The conference call will be accessible by dialing toll-free (844) 835-7432 for domestic callers or (404) 537-3372 for international callers. Dial-in participants must provide the passcode 73917985. In addition, a webcast will be accessible via the Investor Relations section of the Company’s 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 (855) 859-2056 for domestic callers and (404) 537-3406 for international callers. Replay listeners must provide the passcode 73917985.Non-GAAP Measures of Financial Performance