Repligen(RGEN) - 2022 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION This section presents the company's unaudited consolidated financial statements, management's discussion, market risk, and internal controls assessment Financial Statements This section presents Repligen's unaudited consolidated financial statements, including balance sheets, income, and cash flows, detailing financial position and performance Consolidated Balance Sheets As of June 30, 2022, total assets increased to $2.44 billion, liabilities to $639.6 million, and stockholders' equity to $1.81 billion Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Total current assets | $975,995 | $931,677 | | Total assets | $2,444,916 | $2,358,354 | | Total current liabilities | $423,522 | $375,262 | | Total liabilities | $639,552 | $608,287 | | Total stockholders' equity | $1,805,364 | $1,750,067 | Consolidated Statements of Comprehensive Income For Q2 2022, revenue grew 27.4% to $207.6 million with $49.9 million net income, and six-month revenue rose 35.4% to $414.0 million Financial Performance (in thousands, except per share data) | Metric | Q2 2022 | Q2 2021 | YTD 2022 | YTD 2021 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $207,633 | $162,960 | $414,033 | $305,797 | | Income from Operations | $63,168 | $48,240 | $123,168 | $84,623 | | Net Income | $49,861 | $36,233 | $96,825 | $65,683 | | Diluted EPS | $0.88 | $0.64 | $1.68 | $1.16 | Consolidated Statements of Cash Flows Net cash from operating activities was $68.8 million for the six months ended June 30, 2022, with investing activities using $54.4 million, leading to a $7.3 million cash decrease Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $68,834 | $46,913 | | Net cash used in investing activities | ($54,434) | ($26,198) | | Net cash (used in) provided by financing activities | ($14,314) | $852 | | Net (decrease) increase in cash | ($7,302) | $17,035 | Notes to Unaudited Consolidated Financial Statements The notes detail accounting policies, 2021 acquisitions, revenue by geography, goodwill, intangibles, convertible notes, and stock-based compensation - Effective January 1, 2022, the company adopted ASU 2020-06, which simplified accounting for convertible debt, resulting in material adjustments of $39.1 million to additional paid-in capital and $17.3 million to retained earnings[23] - The company details the 2021 acquisitions of Bio-Flex/NTM and Avitide, with the Avitide acquisition including up to $125.0 million in contingent consideration[36][49] - The 0.375% Convertible Senior Notes due 2024 became convertible at the option of holders during Q3 2022, as the stock price condition was met, and their carrying value is classified as a current liability[84] Revenue by Geography (Six Months Ended June 30) | Region | 2022 (%) | 2021 (%) | | :--- | :--- | :--- | | North America | 43 | 42 | | Europe | 39 | 39 | | APAC/Other | 18 | 19 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance, highlighting revenue growth, gross margin trends, and strong liquidity with $596.5 million in cash Results of Operations Total revenue for the six months ended June 30, 2022, increased 35.4% to $414.0 million, with a slight gross margin decrease and rising operating expenses Revenue Comparison (in thousands) | Period | 2022 | 2021 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $207,633 | $162,960 | $44,673 | 27.4% | | Six Months Ended June 30 | $414,033 | $305,797 | $108,236 | 35.4% | - Product revenue growth was driven by robust demand for filtration, chromatography, and process analytics products, continued adoption by key customers, and contributions from 2021 acquisitions[139] - Gross margin for the six months ended June 30, 2022, decreased to 59.3% from 60.2% in 2021, primarily due to increased employee-related costs, higher occupancy costs from capacity expansion, and increased depreciation expense[144] - R&D expenses for the six months ended June 30, 2022, increased by 41.2% to $22.6 million, driven by spending on new product development and investments in newly acquired businesses[146] Non-GAAP Financial Measures The company provides non-GAAP financial measures, with adjusted income from operations at $132.9 million and adjusted EBITDA at $139.9 million for the six months ended June 30, 2022 Reconciliation of GAAP Net Income to Adjusted EBITDA (Six Months Ended June 30, in thousands) | Description | 2022 | 2021 | | :--- | :--- | :--- | | GAAP net income | $96,825 | $65,683 | | EBITDA Adjustments | $46,478 | $35,368 | | EBITDA | $143,303 | $101,051 | | Other non-GAAP adjustments | ($3,404) | $7,371 | | Adjusted EBITDA | $139,899 | $108,422 | Reconciliation of GAAP to Non-GAAP Adjusted Net Income (Six Months Ended June 30, in thousands) | Description | 2022 | 2021 | | :--- | :--- | :--- | | GAAP net income | $96,825 | $65,683 | | Non-GAAP adjustments | $8,307 | $17,947 | | Non-GAAP adjusted net income | $105,132 | $83,630 | Liquidity and Capital Resources As of June 30, 2022, Repligen had $596.5 million in cash, with $68.8 million from operating activities, deemed sufficient for at least 24 months - The company ended the quarter with $596.5 million in cash and cash equivalents[168] - Cash from operating activities for the six months ended June 30, 2022, was $68.8 million, an increase of $21.9 million from the prior year, driven by higher net income[170][171] - Investing activities used $54.4 million, mainly for capital expenditures to increase manufacturing capacity[173] - Management believes current cash balances are adequate to meet cash needs for at least the next 24 months[177] Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risks, primarily interest rate and foreign exchange, with no current hedging of foreign currency exposure - The company's primary market risks are interest rate and foreign exchange risk[183][185] - As of June 30, 2022, the company had no investments subject to interest rate risk[183] - The company does not currently hedge its exposure to foreign currency fluctuations, with primary exposures in the Swedish krona, Euro, and British pound[185] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2022, with no material changes to internal controls - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2022[186] - No material changes to internal control over financial reporting occurred during the three months ended June 30, 2022[187] PART II - OTHER INFORMATION This section details legal proceedings, risk factor updates, unregistered equity sales, and a list of filed exhibits Legal Proceedings The company reports no material legal proceedings or claims that would adversely affect its business or financial condition - The company reports no material legal proceedings[189] Risk Factors No material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K have been reported - No material changes to the risk factors described in the Form 10-K for the period ended December 31, 2021, have been reported[190] Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or use of proceeds were reported for the period - None[191] Exhibits This section lists the exhibits filed with the Form 10-Q, including corporate governance documents and required certifications - Lists exhibits filed with the report, including certifications by the CEO and CFO[196]