2019 Q1 Form 10-Q Financial Statement

#000173910419000010 Filed on May 14, 2019

View on sec.gov

Income Statement

Concept 2019 Q1 2018 Q1
Revenue $731.1M $736.2M
YoY Change -0.69% 4.46%
Cost Of Revenue $343.8M $360.0M
YoY Change -4.5% 6.32%
Gross Profit $387.3M $376.2M
YoY Change 2.95% 2.73%
Gross Profit Margin 52.97% 51.1%
Selling, General & Admin $181.1M $180.0M
YoY Change 0.61%
% of Gross Profit 46.76% 47.85%
Research & Development $64.10M $65.20M
YoY Change -1.69%
% of Gross Profit 16.55% 17.33%
Depreciation & Amortization $75.20M $74.30M
YoY Change 1.21%
% of Gross Profit 19.42% 19.75%
Operating Expenses $245.2M $245.2M
YoY Change 0.0% -5.07%
Operating Profit $142.1M $131.0M
YoY Change 8.47% 21.41%
Interest Expense $20.80M $0.00
YoY Change
% of Operating Profit 14.64% 0.0%
Other Income/Expense, Net -$2.600M -$1.900M
YoY Change 36.84%
Pretax Income $44.80M $77.50M
YoY Change -42.19% -246.5%
Income Tax $13.30M $4.800M
% Of Pretax Income 29.69% 6.19%
Net Earnings $31.50M $72.70M
YoY Change -56.67% -173.96%
Net Earnings / Revenue 4.31% 9.88%
Basic Earnings Per Share $0.09 $0.25
Diluted Earnings Per Share $0.09 $0.25
COMMON SHARES
Basic Shares Outstanding 365.7M shares 293.3M shares
Diluted Shares Outstanding 366.0M shares 293.3M shares

Balance Sheet

Concept 2019 Q1 2018 Q1
SHORT-TERM ASSETS
Cash & Short-Term Investments $272.0M
YoY Change
Cash & Equivalents $272.1M $263.4M
Short-Term Investments
Other Short-Term Assets $144.0M
YoY Change
Inventory $1.036B
Prepaid Expenses
Receivables $684.1M
Other Receivables $107.8M
Total Short-Term Assets $2.278B
YoY Change
LONG-TERM ASSETS
Property, Plant & Equipment $930.2M
YoY Change
Goodwill $2.933B
YoY Change
Intangibles $2.387B
YoY Change
Long-Term Investments $15.70M
YoY Change
Other Assets $219.3M
YoY Change
Total Long-Term Assets $6.469B
YoY Change
TOTAL ASSETS
Total Short-Term Assets $2.278B
Total Long-Term Assets $6.469B
Total Assets $8.747B
YoY Change
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $252.1M
YoY Change
Accrued Expenses $86.00M
YoY Change
Deferred Revenue $171.7M
YoY Change
Short-Term Debt $0.00
YoY Change
Long-Term Debt Due $29.00M
YoY Change
Total Short-Term Liabilities $708.2M
YoY Change
LONG-TERM LIABILITIES
Long-Term Debt $2.437B
YoY Change
Other Long-Term Liabilities $168.4M
YoY Change
Total Long-Term Liabilities $2.605B
YoY Change
TOTAL LIABILITIES
Total Short-Term Liabilities $708.2M
Total Long-Term Liabilities $2.605B
Total Liabilities $3.551B
YoY Change
SHAREHOLDERS EQUITY
Retained Earnings $47.90M
YoY Change
Common Stock $0.00
YoY Change
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares
Shareholders Equity $5.196B $7.902B
YoY Change
Total Liabilities & Shareholders Equity $8.747B
YoY Change

Cashflow Statement

Concept 2019 Q1 2018 Q1
OPERATING ACTIVITIES
Net Income $31.50M $72.70M
YoY Change -56.67% -173.96%
Depreciation, Depletion And Amortization $75.20M $74.30M
YoY Change 1.21%
Cash From Operating Activities $8.100M $47.00M
YoY Change -82.77%
INVESTING ACTIVITIES
Capital Expenditures $28.00M $32.70M
YoY Change -14.37%
Acquisitions
YoY Change
Other Investing Activities $500.0K $1.700M
YoY Change -70.59%
Cash From Investing Activities -$31.00M -$34.40M
YoY Change -9.88%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities -$339.5M -$76.50M
YoY Change 343.79%
NET CHANGE
Cash From Operating Activities $8.100M $47.00M
Cash From Investing Activities -$31.00M -$34.40M
Cash From Financing Activities -$339.5M -$76.50M
Net Change In Cash -$376.9M -$60.00M
YoY Change 528.17%
FREE CASH FLOW
Cash From Operating Activities $8.100M $47.00M
Capital Expenditures $28.00M $32.70M
Free Cash Flow -$19.90M $14.30M
YoY Change -239.16%

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CY2018Q4 us-gaap Other Liabilities Current
OtherLiabilitiesCurrent
199000000 USD
CY2019Q1 us-gaap Other Liabilities Current
OtherLiabilitiesCurrent
191200000 USD
CY2018Q4 us-gaap Other Liabilities Noncurrent
OtherLiabilitiesNoncurrent
121500000 USD
CY2019Q1 us-gaap Other Liabilities Noncurrent
OtherLiabilitiesNoncurrent
168400000 USD
CY2018Q1 us-gaap Other Operating Activities Cash Flow Statement
OtherOperatingActivitiesCashFlowStatement
1400000 USD
CY2019Q1 us-gaap Other Operating Activities Cash Flow Statement
OtherOperatingActivitiesCashFlowStatement
-9400000 USD
CY2019Q1 us-gaap Payments For Restructuring
PaymentsForRestructuring
7600000 USD
CY2018Q1 us-gaap Payments To Acquire Property Plant And Equipment
PaymentsToAcquirePropertyPlantAndEquipment
32700000 USD
CY2019Q1 us-gaap Payments To Acquire Property Plant And Equipment
PaymentsToAcquirePropertyPlantAndEquipment
28000000 USD
CY2018Q4 us-gaap Pension And Other Postretirement Defined Benefit Plans Liabilities Noncurrent
PensionAndOtherPostretirementDefinedBenefitPlansLiabilitiesNoncurrent
109100000 USD
CY2019Q1 us-gaap Weighted Average Number Of Diluted Shares Outstanding
WeightedAverageNumberOfDilutedSharesOutstanding
366000000 shares
CY2019Q1 us-gaap Pension And Other Postretirement Defined Benefit Plans Liabilities Noncurrent
PensionAndOtherPostretirementDefinedBenefitPlansLiabilitiesNoncurrent
106200000 USD
CY2018Q4 us-gaap Prepaid Expense And Other Assets Current
PrepaidExpenseAndOtherAssetsCurrent
113900000 USD
CY2019Q1 us-gaap Prepaid Expense And Other Assets Current
PrepaidExpenseAndOtherAssetsCurrent
114800000 USD
CY2018Q1 us-gaap Proceeds From Payments For Other Financing Activities
ProceedsFromPaymentsForOtherFinancingActivities
-400000 USD
CY2019Q1 us-gaap Proceeds From Payments For Other Financing Activities
ProceedsFromPaymentsForOtherFinancingActivities
-500000 USD
CY2018Q4 us-gaap Property Plant And Equipment Net
PropertyPlantAndEquipmentNet
922400000 USD
CY2019Q1 us-gaap Property Plant And Equipment Net
PropertyPlantAndEquipmentNet
930200000 USD
CY2018Q1 us-gaap Repayments Of Long Term Lines Of Credit
RepaymentsOfLongTermLinesOfCredit
0 USD
CY2019Q1 us-gaap Repayments Of Long Term Lines Of Credit
RepaymentsOfLongTermLinesOfCredit
7500000 USD
CY2018Q1 us-gaap Research And Development Expense
ResearchAndDevelopmentExpense
65200000 USD
CY2019Q1 us-gaap Research And Development Expense
ResearchAndDevelopmentExpense
64100000 USD
CY2018Q1 us-gaap Restricted Cash Current
RestrictedCashCurrent
0 USD
CY2018Q4 us-gaap Restricted Cash Current
RestrictedCashCurrent
202700000 USD
CY2019Q1 us-gaap Restricted Cash Current
RestrictedCashCurrent
28500000 USD
CY2018Q1 us-gaap Restructuring Charges
RestructuringCharges
100000 USD
CY2019Q1 us-gaap Restructuring Charges
RestructuringCharges
500000 USD
CY2017Q4 us-gaap Restructuring Reserve
RestructuringReserve
78000000 USD
CY2018Q1 us-gaap Restructuring Reserve
RestructuringReserve
57600000 USD
CY2018Q4 us-gaap Restructuring Reserve
RestructuringReserve
44400000 USD
CY2019Q1 us-gaap Restructuring Reserve
RestructuringReserve
37300000 USD
CY2018Q1 us-gaap Restructuring Reserve Accrual Adjustment1
RestructuringReserveAccrualAdjustment1
-200000 USD
CY2018Q1 us-gaap Restructuring Settlement And Impairment Provisions
RestructuringSettlementAndImpairmentProvisions
2400000 USD
CY2019Q1 us-gaap Restructuring Settlement And Impairment Provisions
RestructuringSettlementAndImpairmentProvisions
24900000 USD
CY2018Q4 us-gaap Retained Earnings Accumulated Deficit
RetainedEarningsAccumulatedDeficit
16400000 USD
CY2019Q1 us-gaap Retained Earnings Accumulated Deficit
RetainedEarningsAccumulatedDeficit
47900000 USD
CY2018Q1 us-gaap Revenue From Contract With Customer Excluding Assessed Tax
RevenueFromContractWithCustomerExcludingAssessedTax
736200000 USD
CY2019Q1 us-gaap Revenue From Contract With Customer Excluding Assessed Tax
RevenueFromContractWithCustomerExcludingAssessedTax
731100000 USD
CY2019Q1 us-gaap Revenue Performance Obligation Description Of Timing
RevenuePerformanceObligationDescriptionOfTiming
Payment terms differ by jurisdiction and customer, but payment terms in most of our major jurisdictions typically range from 30 to 100 days from date of shipment.
CY2019Q1 us-gaap Right Of Use Asset Obtained In Exchange For Operating Lease Liability
RightOfUseAssetObtainedInExchangeForOperatingLeaseLiability
100000 USD
CY2018Q1 us-gaap Selling General And Administrative Expense
SellingGeneralAndAdministrativeExpense
180000000 USD
CY2019Q1 us-gaap Selling General And Administrative Expense
SellingGeneralAndAdministrativeExpense
181100000 USD
CY2018Q1 us-gaap Severance Costs1
SeveranceCosts1
100000 USD
CY2019Q1 us-gaap Severance Costs1
SeveranceCosts1
500000 USD
CY2018Q1 us-gaap Share Based Compensation
ShareBasedCompensation
6900000 USD
CY2019Q1 us-gaap Share Based Compensation
ShareBasedCompensation
7700000 USD
CY2019Q1 us-gaap Short Term Lease Cost
ShortTermLeaseCost
200000 USD
CY2017Q4 us-gaap Stockholders Equity
StockholdersEquity
7780300000 USD
CY2018Q1 us-gaap Stockholders Equity
StockholdersEquity
7902100000 USD
CY2018Q4 us-gaap Stockholders Equity
StockholdersEquity
5197500000 USD
CY2019Q1 us-gaap Stockholders Equity
StockholdersEquity
5196200000 USD
CY2018Q3 us-gaap Stockholders Equity Note Stock Split Conversion Ratio1
StockholdersEquityNoteStockSplitConversionRatio1
2932900
CY2019Q1 us-gaap Variable Lease Cost
VariableLeaseCost
500000 USD
CY2018Q1 us-gaap Weighted Average Number Of Diluted Shares Outstanding
WeightedAverageNumberOfDilutedSharesOutstanding
293300000 shares
CY2018Q1 us-gaap Weighted Average Number Of Shares Outstanding Basic
WeightedAverageNumberOfSharesOutstandingBasic
293300000 shares
CY2019Q1 us-gaap Weighted Average Number Of Shares Outstanding Basic
WeightedAverageNumberOfSharesOutstandingBasic
365700000 shares
CY2019Q1 us-gaap Basis Of Accounting
BasisOfAccounting
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-bottom:8px;padding-top:8px;text-indent:0px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;font-weight:bold;">Note 2. Basis of Presentation</font><font style="font-family:inherit;font-size:10pt;"> </font></div><div style="line-height:120%;padding-bottom:8px;padding-top:8px;text-align:justify;text-indent:12px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">We have prepared the accompanying unaudited condensed consolidated and combined financial statements in accordance with the requirements of Form 10-Q and, therefore, they do not include all information and footnotes necessary for a fair presentation of financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States (GAAP). In our opinion, the financial statements reflect all adjustments (including those that are normal and recurring) that are necessary for a fair presentation of the results of operations for the periods shown. In preparing financial statements in conformity with GAAP, we must make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures at the date of the financial statements and during the reporting period. Actual results could differ from those estimates.</font></div><div style="line-height:120%;padding-bottom:8px;padding-top:8px;text-align:justify;text-indent:12px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">Certain reclassifications have been made to prior periods in the unaudited condensed consolidated and combined financial statements and accompanying notes to conform with current presentation. </font></div><div style="line-height:120%;padding-bottom:8px;padding-top:8px;text-align:justify;text-indent:12px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">The information included in this Quarterly Report on Form 10-Q should be read in conjunction with our combined financial statements and accompanying notes for the year ended December 31, 2018 included in our Annual Report on Form 10-K filed with the SEC on February 20, 2019.</font></div><div style="line-height:120%;padding-bottom:8px;padding-top:8px;text-align:justify;text-indent:12px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">For the periods after Separation, the financial statements are prepared on a consolidated basis and reflect the results of operations, comprehensive income, financial position, equity and cash flows resulting from our operations as an independent company. For periods prior to the Separation, our financial statements are combined, have been prepared on a standalone basis, and are derived from Lilly's consolidated financial statements and accounting records. The consolidated and combined financial statements reflect the financial position, results of operations and cash flows related to the animal health businesses that were transferred to Elanco Parent and are prepared in conformity with GAAP.</font></div><div style="line-height:120%;padding-bottom:8px;padding-top:8px;text-align:justify;text-indent:12px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">The combined financial statements include the attribution of certain assets and liabilities that historically have been held at the Lilly corporate level but which are specifically identifiable or attributable to the businesses that have been transferred to Elanco Parent. All intercompany transactions and accounts within Elanco have been eliminated. All transactions between us and Lilly are considered to be effectively settled in the combined financial statements at the time the intercompany transaction is recorded. The total net effect of the settlement of these intercompany transactions is reflected in the combined statements of cash flows as a financing activity and in the condensed consolidated and combined statement of equity as net parent company investment.</font></div><div style="line-height:120%;padding-bottom:8px;padding-top:8px;text-align:justify;text-indent:12px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">Prior to Separation, these combined financial statements include an allocation of expenses related to certain Lilly corporate functions, including executive oversight, treasury, legal, finance, human resources, tax, internal audit, financial reporting, information technology and investor relations, prior to IPO. These expenses have been allocated to us based on direct usage or benefit where specifically identifiable, with the remainder allocated primarily on a pro rata basis of revenue, headcount and other measures. We consider the expenses methodology and results to be reasonable for all periods presented. However, the allocations may not be indicative of the actual expense that would have been incurred had we operated as an independent, publicly traded company for the periods presented. It is impractical to estimate what the standalone costs of Elanco would have been in the historical periods. After the Separation, a Transitional Services Agreement (TSA) between Lilly and Elanco went into effect. Under the terms of the TSA, we will be able to use these Lilly services for a fixed term established on a service-by-service basis. We are paying Lilly mutually agreed upon fees for the Lilly services provided under the TSA. Our consolidated and combined financial statements reflect the charges for Lilly services after the IPO. See Note 15 for additional details.</font></div><div style="line-height:120%;padding-bottom:8px;padding-top:8px;text-align:justify;text-indent:12px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">The income tax amounts in the combined financial statements have been calculated based on a separate return methodology and presented as if our operations were separate taxpayers in the respective jurisdictions. We file income tax returns in the United States (U.S.) federal jurisdiction and various state, local and non-U.S. jurisdictions. Certain of these income tax returns are filed on a consolidated or combined basis with Eli Lilly and Company and/or its subsidiaries.</font></div><div style="line-height:120%;padding-bottom:8px;padding-top:8px;text-align:justify;text-indent:12px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">Prior to Separation, Lilly maintained various benefit and combined stock-based compensation plans at a corporate level and other benefit plans at a country level. Our employees participated in such programs and the portion of the cost of those plans related to our employees is included in our financial statements. However, the condensed balance sheets do not include any equity issued related to stock-based compensation plans or any net benefit plan obligations unless the benefit plan covers only our dedicated employees or where the legal obligation associated with the benefit plan transferred to Elanco. Upon Lilly's full divestiture of Elanco in March 2019, all Lilly share-based awards held by our employees were converted into awards that will be settled in Elanco shares.</font></div><div style="line-height:120%;padding-bottom:8px;padding-top:8px;text-align:justify;text-indent:12px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">Prior to Separation, the equity balance in the combined financial statements represents the excess of total assets over liabilities, including intercompany balances between Elanco and Lilly (net parent company investment) and accumulated other comprehensive income/(loss). Net parent company investment is primarily impacted by contributions from Lilly which are the result of treasury activities and net funding provided by or distributed to Lilly. See Note 15 for further information.</font></div></div>
CY2019Q1 us-gaap Prior Period Reclassification Adjustment Description
PriorPeriodReclassificationAdjustmentDescription
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-bottom:8px;padding-top:8px;text-align:justify;text-indent:12px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">Certain reclassifications have been made to prior periods in the unaudited condensed consolidated and combined financial statements and accompanying notes to conform with current presentation.</font></div></div>

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