Repligen(RGEN) - 2021 Q2 - Quarterly Report

PART I Financial Statements This section presents Repligen Corporation's unaudited interim consolidated financial statements, including balance sheets, income statements, equity statements, cash flow statements, and related notes Consolidated Balance Sheets Total assets increased to $2.016 billion, driven by cash, receivables, and inventories, while liabilities rose to $412.9 million and equity to $1.603 billion Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Total Current Assets | $983,830 | $902,382 | | Total Assets | $2,015,965 | $1,902,887 | | Total Current Liabilities | $332,342 | $318,956 | | Total Liabilities | $412,896 | $373,737 | | Total Stockholders' Equity | $1,603,069 | $1,529,150 | Consolidated Statements of Comprehensive Income Total revenue for Q2 2021 increased 86.3% to $163.0 million, with net income reaching $36.2 million, and for H1 2021, revenue grew 87.0% to $305.8 million, yielding $65.7 million in net income Financial Performance (in thousands, except per share data) | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $162,960 | $87,462 | $305,797 | $163,552 | | Income from Operations | $48,240 | $19,537 | $84,623 | $31,443 | | Net Income | $36,233 | $15,861 | $65,683 | $25,676 | | Diluted EPS | $0.64 | $0.30 | $1.16 | $0.48 | Consolidated Statements of Cash Flows Net cash from operating activities for H1 2021 increased to $46.9 million, while net cash used in investing activities rose to $26.2 million, primarily for capital expenditures Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $46,913 | $26,265 | | Net cash used in investing activities | $(26,198) | $(9,517) | | Net cash provided by financing activities | $852 | $5,402 | | Net increase in cash | $17,035 | $22,957 | Notes to Unaudited Consolidated Financial Statements These notes detail significant accounting policies, fair value measurements, recent business acquisitions, revenue recognition, goodwill, intangible assets, convertible senior notes, stock-based compensation, income taxes, segment reporting, and subsequent events - The company acquired ARTeSYN for approximately $204.0 million, NMS for $16.1 million, and EMT for $28.5 million, significantly expanding its single-use technology portfolio. These acquisitions were accounted for as business combinations[36][47][56] - The 0.375% Convertible Senior Notes due 2024 became convertible at the option of the holders during Q3 2021, as the company's stock price exceeded the conversion price threshold. The company intends to settle the par value in cash[78][97] - Subsequent to the quarter end, on July 1, 2021, the company closed the acquisition of Polymem S.A., a French manufacturer of hollow fiber membranes, to expand its manufacturing capacity in Europe[106][107] Revenue by Geographic Region (Six Months Ended June 30) | Region | 2021 | 2020 | | :--- | :--- | :--- | | North America | 42% | 47% | | Europe | 39% | 39% | | APAC/Other | 19% | 14% | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's strong financial performance, driven by robust demand for bioprocessing products, highlighting 87.0% revenue growth, improved gross margins, increased operating expenses, liquidity, capital resources, and non-GAAP financial reconciliations Overview and Acquisitions Repligen, a global life sciences company, strategically expanded its bioprocessing portfolio through acquisitions of ARTeSYN, NMS, and EMT in 2020, and Polymem S.A. in July 2021, enhancing single-use systems and manufacturing capacity - The company's strategy involves both organic growth and targeted acquisitions to enhance its bioprocessing product platform[111] - Acquired ARTeSYN in December 2020 for ~$200 million to add a suite of single-use systems for chromatography, filtration, and continuous manufacturing[114][115] - Acquired Polymem S.A. in July 2021 to substantially increase membrane manufacturing capacity and establish a center of excellence in Europe[112][113] Results of Operations Total revenue for H1 2021 grew 87.0% to $305.8 million, driven by strong demand, leading to improved gross margin of 60.2% despite increased operating expenses from acquisitions and growth investments Revenue Growth (H1 2021 vs H1 2020) | Metric | H1 2021 | H1 2020 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Product Revenue | $305,657 | $163,492 | $142,165 | 87.0% | | Total Revenue | $305,797 | $163,552 | $142,245 | 87.0% | - Revenue growth was driven by accelerated demand for products used in COVID-19 vaccine and therapeutic manufacturing, as well as in gene therapy and monoclonal antibody production[128] - Gross margin for H1 2021 was 60.2% (60.7% excluding inventory step-up charges), up from 57.9% in H1 2020, due to higher revenue and favorable product mix[132] - SG&A expenses for H1 2021 increased by 53.9% to $83.4 million, partly due to the addition of EMT, NMS, and ARTeSYN, which contributed $6.8 million of the increase[138] Non-GAAP Financial Measures The company presents non-GAAP financial measures, including adjusted income from operations of $102.3 million, adjusted net income of $83.6 million ($1.47 per diluted share), and adjusted EBITDA of $108.4 million, to provide a clearer view of operational performance Reconciliation of GAAP Net Income to Adjusted EBITDA (H1 2021 vs H1 2020, in thousands) | Metric | H1 2021 | H1 2020 | | :--- | :--- | :--- | | GAAP net income | $65,683 | $25,676 | | Adjustments (Interest, Taxes, D&A, etc.) | $25,956 | $18,225 | | EBITDA | $101,051 | $43,929 | | Other non-GAAP adjustments | $7,371 | $4,687 | | Adjusted EBITDA | $108,422 | $48,616 | Reconciliation of GAAP to Non-GAAP Adjusted Net Income (H1 2021 vs H1 2020, in thousands) | Metric | H1 2021 | H1 2020 | | :--- | :--- | :--- | | GAAP net income | $65,683 | $25,676 | | Non-GAAP adjustments | $17,947 | $13,592 | | Non-GAAP adjusted net income | $83,630 | $39,268 | | Non-GAAP adjusted diluted EPS | $1.47 | $0.74 | Liquidity and Capital Resources As of June 30, 2021, the company held $734.3 million in cash, with $46.9 million from operations, and believes its liquidity is sufficient for the next 24 months, despite $26.2 million in capital expenditures and new facility leases - Cash and cash equivalents stood at $734.3 million at June 30, 2021[153] - Cash provided by operating activities for H1 2021 was $46.9 million, driven by $65.7 million in net income, offset by increases in accounts receivable and inventory[159] - The company entered into a lease for ~64,000 sq. ft. in Hopkinton, MA for a new assembly center, with base rent commitment of $17.7 million over the lease term expiring in 2034[157] - The company believes current cash is adequate for at least the next 24 months, but may seek additional financing for strategic acquisitions[164][165] Quantitative and Qualitative Disclosures About Market Risk The company's market risk primarily stems from interest rate and foreign exchange fluctuations, with no commercial paper or bond investments, and unhedged exposure to the Swedish krona, Euro, and British pound - The company has no investments in commercial paper, corporate bonds, or other debt securities as of June 30, 2021, thus a 100 basis point change in interest rates would have no effect on its cash position[170] - The company is exposed to foreign currency fluctuations, primarily from the Swedish krona, Euro, and British pound, and does not currently hedge this risk[173] Controls and Procedures Management concluded that disclosure controls and procedures were effective, with ongoing phased implementation of a new ERP system and completed consolidation system leading to modifications in internal controls over financial reporting - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of the end of the quarter[174] - The company continued the phased implementation of a new ERP system and completed a new consolidation system, leading to modifications in internal controls over financial reporting[175] PART II - OTHER INFORMATION Legal Proceedings The company reports no material legal proceedings or claims that would adversely affect its business, financial condition, or results of operations - The company reports no material legal proceedings[177] Risk Factors No material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the period ended December 31, 2020 are reported - No material changes to risk factors from the Form 10-K for the period ended December 31, 2020 are reported[178] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or use of proceeds during the period - None[179] Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files - Exhibits filed include CEO and CFO certifications (31.1, 31.2, 32.1) and XBRL interactive data files[183]