Repligen(US:RGEN)2021-10-28 20:51PART I - FINANCIAL INFORMATION Financial Statements Unaudited interim financial statements show significant growth in assets, revenue, and net income, with strong operational cash flow despite cash used for acquisitions Consolidated Balance Sheets Total assets increased to $2.24 billion as of September 30, 2021, driven by acquisitions, with a corresponding rise in liabilities and stockholders' equity Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Total Assets | $2,241,397 | $1,902,887 | | Cash and cash equivalents | $621,098 | $717,292 | | Inventories, net | $156,163 | $95,025 | | Intangible assets, net | $340,163 | $287,100 | | Goodwill | $833,559 | $618,305 | | Total Liabilities | $526,132 | $373,737 | | Noncurrent contingent consideration | $79,962 | $0 | | Total stockholders' equity | $1,715,265 | $1,529,150 | Consolidated Statements of Comprehensive Income The company reported significant year-over-year growth in revenue and profitability for both the quarter and nine-month period ended September 30, 2021 Financial Performance (in thousands, except per share data) | Metric | Q3 2021 | Q3 2020 | % Change | Nine Months 2021 | Nine Months 2020 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $178,216 | $94,060 | 89.5% | $484,013 | $257,612 | 87.9% | | Income from Operations | $45,194 | $20,961 | 115.6% | $129,817 | $52,404 | 147.7% | | Net Income | $33,498 | $14,552 | 129.9% | $99,181 | $40,228 | 146.5% | | Diluted EPS | $0.58 | $0.27 | 114.8% | $1.74 | $0.75 | 132.0% | Consolidated Statements of Stockholders' Equity Total stockholders' equity increased to $1.72 billion, primarily driven by net income and common stock issuance for the Avitide acquisition - Key drivers for the increase in stockholders' equity during the first nine months of 2021 were net income of $99.2 million and stock-based compensation of $20.5 million15 - The company issued 271,096 shares of common stock valued at $77.6 million as part of the consideration for the acquisition of Avitide Inc15 Consolidated Statements of Cash Flows Net cash from operations increased, but significant cash used in investing activities, primarily for acquisitions, led to an overall decrease in cash and cash equivalents Cash Flow Summary (Nine Months Ended Sep 30, in thousands) | Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $69,396 | $47,754 | | Net cash used in investing activities | ($158,893) | ($43,097) | | Net cash provided by financing activities | $730 | $7,078 | | Net (decrease) increase in cash | ($96,194) | $15,895 | - Cash used for acquisitions, net of cash acquired, was $121.0 million in the first nine months of 2021, a significant increase from $28.4 million in the same period of 202018 Notes to Unaudited Consolidated Financial Statements The notes provide detailed disclosures on accounting policies, recent acquisitions, asset composition, convertible notes, and segment reporting Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes strong financial performance to robust demand and strategic acquisitions, maintaining a strong liquidity position despite significant investment outflows Acquisitions Repligen completed key acquisitions of Avitide and Polymem in 2021, expanding capabilities in affinity ligand development and hollow fiber manufacturing - Avitide, Inc. Acquisition (Sep 2021): Acquired for its leading technology in affinity ligand discovery and development, aiming to expand Repligen's proteins franchise to address purification needs of gene therapies and other emerging modalities133134 - Polymem S.A. Acquisition (Jul 2021): Acquired to expand the portfolio of hollow fiber systems and consumables, substantially increasing membrane and module manufacturing capacity and establishing a center of excellence in Europe135136 Results of Operations Revenue for the nine months increased by 87.9% to $484.0 million, driven by strong product demand, while operating expenses also rose significantly Revenue Breakdown (in thousands) | Period | Product Revenue | % Change YoY | Total Revenue | % Change YoY | | :--- | :--- | :--- | :--- | :--- | | Q3 2021 | $178,177 | 89.5% | $178,216 | 89.5% | | Nine Months 2021 | $483,834 | 87.9% | $484,013 | 87.9% | - Product revenue growth was driven by robust demand for filtration and proteins products, accelerated demand related to COVID-19 vaccines and therapeutics, and increased demand for gene therapy and monoclonal antibody manufacturing147 Operating Expense Changes (Nine Months 2021 vs 2020) | Expense Category | % Change YoY | | :--- | :--- | | Cost of product revenue | 81.8% | | Research and development | 86.9% | | Selling, general and administrative | 58.3% | Non-GAAP Financial Measures Non-GAAP financial measures are provided to offer a clearer view of operational performance by excluding specific non-recurring or non-cash items Reconciliation of GAAP to Non-GAAP Adjusted Net Income (Nine Months Ended Sep 30, 2021) | Description | Amount (in thousands) | Per Share | | :--- | :--- | :--- | | GAAP net income | $99,181 | $1.74 | | Inventory step-up charges | $1,868 | $0.03 | | Acquisition and integration costs | $11,593 | $0.20 | | Intangible amortization | $16,001 | $0.28 | | Non-cash interest expense | $8,592 | $0.15 | | Tax effect of non-GAAP charges | ($8,904) | ($0.16) | | Non-GAAP adjusted net income | $128,337 | $2.25 | Adjusted EBITDA (in thousands) | Period | Q3 2021 | Q3 2020 | Nine Months 2021 | Nine Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Adjusted EBITDA | $60,516 | $29,416 | $168,939 | $78,032 | Liquidity and Capital Resources The company maintains a strong liquidity position with $621.1 million in cash, sufficient for future needs despite significant cash outflows for acquisitions - The company held $621.1 million in cash and cash equivalents at September 30, 2021, down from $717.3 million at December 31, 2020172 Cash Flow Summary (Nine Months Ended Sep 30, 2021, in thousands) | Activity | Cash Flow | | :--- | :--- | | Operating activities | $69,396 | | Investing activities | ($158,893) | | Financing activities | $730 | - The company believes its current cash balances are adequate to meet cash needs for at least the next 24 months, absent further acquisitions187 Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks are interest rates and foreign currency exchange, with no hedging currently employed for foreign currency exposure - The company has no investments in commercial paper, government securities, or corporate bonds as of September 30, 2021, thus a hypothetical 100 basis point interest rate increase would have no effect on its cash position195 - Primary foreign currency exposures include the Swedish krona, Euro, and British pound. The company does not currently use hedging instruments to manage this risk197 Controls and Procedures Management concluded disclosure controls and procedures were effective, with the assessment of internal controls excluding recently acquired businesses - Management concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of the end of the quarter198 - The scope of the assessment of internal control over financial reporting for Q3 2021 does not include the recently acquired Polymem and Avitide businesses199 PART II - OTHER INFORMATION Legal Proceedings The company reports no material legal proceedings or claims that would adversely affect its operations or financial condition - As of the filing date, the company reports no material legal proceedings201 Risk Factors No material changes to previously disclosed risk factors from the annual report are reported - No material changes to risk factors from the Form 10-K for the period ended December 31, 2020 are reported202 Unregistered Sales of Equity Securities and Use of Proceeds The company issued unregistered common stock valued at $77.6 million for the Avitide acquisition, exempt under Rule 506(b) of Regulation D - As part of the Avitide acquisition, the company issued 271,096 unregistered shares of common stock valued at $77.6 million203 Exhibits This section lists exhibits filed with the Form 10-Q, including certifications and XBRL data files Signatures The report is duly signed by the President and CEO, and the CFO, on October 28, 2021