Good day and thank you for standing by. Welcome to the First Quarter 2025 Emergent BioSolutions, Inc. Earnings Conference Call. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Frank Vargo, Vice President, Assistant Treasurer. Please go ahead.

Good afternoon, everyone. Thank you for joining today as Emergent discusses their operational and financial results for the first quarter of 2025. As is customary, today’s call is open to all participants. The call is being recorded and is copyrighted by Emergent BioSolutions. In addition to today’s press release, there are a number of slides accompanying this webcast available to all webcast participants. During today’s call, Emergent may make projections and other forward-looking statements related to their business, future events, their prospects or future performance. These forward-looking statements are based on their current intentions, beliefs and expectations regarding future events. Any forward-looking statement speaks only as of the date of this conference call and except as required by law, Emergent does not undertake to update any forward-looking statements to reflect new information, events or circumstances. Investors should consider this cautionary statement as well as the risk factors identified in Emergent’s periodic reports filed with the SEC when evaluating their forward-looking statements. During today’s call, Emergent may also discuss certain non-GAAP financial measures that involve adjustments to GAAP figures in order to provide greater transparency regarding Emergent’s operating performance. Please refer to the tables found in today’s press release. The agenda for today’s call will include Joe Papa, President and Chief Executive Officer, who will comment on our turnaround progress and a high-level summary of Q1 2025 performance; and Rich Lindahl, EVP and Chief Financial Officer, who will provide further details on the first quarter 2025 financials as well as provide full year guidance for 2025. Joe Papa will conclude by discussing the 2025 business outlook and key catalysts for growth, followed by Q&A. Finally, for the benefit of those who may be listening to the replay of this webcast, this call was held and recorded on May 7, 2025. Since then, Emergent may have made announcements related to topics discussed during today’s call.

Good afternoon and thank you for joining us to review our first quarter 2025 earnings. This is Joe Papa, CEO of Emergent, and I’m joined today by Rich Lindahl, our Chief Financial Officer. I will provide brief comments on our progress with our multi-year turnaround plan in the first quarter results. Then I’ll hand it over to Rich to review the financials, and then I’ll return to provide some additional commentary on our business and our 2025 priorities. We continue to make great progress executing on our multiyear plan to stabilize the company, streamline our operations to improve profitability and transform the company to achieve long-term sustainable growth built on Emergent’s strength. Throughout the quarter, Emergent colleagues executed on our strategic plan with a laser focus on improving operational efficiency and driving profitable growth. I want to call out three great Q1 achievements, all while keeping the Emergent mission statement to protect and save lives at the center of our work. We delivered on our revenue and adjusted EBITDA targets while we further improved our cash and liquidity position. We partnered with the U.S. government and allied nations to ensure preparedness with medical countermeasures, and we delivered life-saving NARCAN Nasal Spray across the U.S. and Canada to patients, customers and communities. And third, we completed two strategic business development transactions that align with and enhance Emergent’s core capabilities. We are reaffirming revenue and adjusted EBITDA guidance for 2025.

Thank you, Joe, and good afternoon, everyone. We appreciate you joining the call. As Joe has just highlighted, we are off to a strong start in 2025 as we continue to make progress on our multiyear transformation plan. We delivered first quarter revenue in line with our guidance, enhanced our cash position and reduced our net leverage ratio. Net income in the first quarter was $68 million, a 656% increase versus the first quarter of 2024. In addition, we saw significant margin expansion, both on the gross margin and adjusted EBITDA margin lines versus the prior year. These metrics support our turnaround objective of focusing on highly profitable components of our business while divesting non-core low-profit assets. Our portfolio of unique medical countermeasure and opioid overdose reversal products also continued to provide life-saving capabilities to people around the world. In the first quarter, we had $91 million of sales outside of the United States for our MCM products. As highlighted on Slide 9, our key financial metrics are total revenues of $222 million, down versus the prior year as lower NARCAN and BAT sales as well as the divestiture of RSDL and Camden were partially offset by higher international smallpox sales. Adjusted EBITDA of $78 million, an increase of $11 million versus the prior year.

Hey guys. Good afternoon and thanks for taking our questions. I kind of have a handful. First, on tariffs, I think you have mentioned that you are not sort of subject to the existing tariffs. Can you just talk a little bit about your manufacturing footprint, including sources of API? Does any product cross the border to pass into the U.S. for sale? Second, can you elaborate on what drove the gross margin improvement this quarter and how to think about that gross margin trajectory from this level that we saw in the first quarter? Third, when you provided the 1Q forecasted revenue range, I think it was $200 million to $240 million. Were some of those NARCAN dynamics in motion, including that competitor selling short-dated product, like was that already contemplated? And then lastly, I think in the past, you had expected the Naloxone market to grow mid to high-single digits year-over-year. And I think on the call, you said mid-single digits. If I heard you correctly, what changed? And can you talk about how you see the various market segments contributing to that mid-single digit growth? Thank you.

Sure. You had quite a few. So, we will try to make sure we get them all. But let me start with the tariffs, and then I think, Rich, you can take the gross margin, and then I will come back on the NARCAN and Naloxone mid-single digit growth. The majority of our product is manufactured and/or sourced, the active ingredients by ourselves here in the United States. So, as I have said, they have very limited tariff exposure. It is true we do obtain at this time, one of the devices for our NARCAN comes from Europe. However, we are working to get that straightened out and get more of it from the U.S. going forward. But that’s something we are working on. So, there is some exposure. But the far and away, the majority of our products are manufactured in the U.S. through our U.S. manufacturing network or in Canada. But in both cases, they are what we refer to as USMCA compliant. So, at the current time, we don’t expect a significant impact on the tariffs from our product portfolio.

Sure. Yes. So, there is a couple of factors at play here, Jess. First is that, as you know, as you are well aware, we have taken a lot of costs out of the business over the last 1.5 years to 2 years. And by selling Camden, by selling Bayview, we have a lot less unutilized capacity. And so that certainly has helped the gross margin side in and of itself. Secondly, the product mix in the first quarter was favorable on that front, in particular, the large amount of international orders, which tend to be higher margin, was also a factor that contributed to that improvement.

On the third question, my recollection was, do we contemplate some of these impacts on NARCAN as we were doing the first quarter, the answer is yes. We clearly knew some of this. As to exactly the magnitude of things like that, I think obviously, we got smarter as time went on in the quarter relative to the magnitude of what the third-party distributor had on hand from a short-dated product. We didn’t know the exact extent of it. We obviously know much more today about what it was, etcetera. So, had we contemplated some of it, yes. But certainly, we got more clarity on the – and transparency on the magnitude as time went on. And then relative to the actual question – the second part of it in terms of the Federal funding, we clearly knew that there was going to be Federal funding for NARCAN and the continuing resolution CR for the government.

Thank you for taking the question. This is Yi for Ram Selvaraju at H.C. Wainwright. I have a couple of questions. The first one is, are the international customers referenced in the March 2025 press release pertaining to the $27 million in medical countermeasure incremental sales likely to place more orders before the end of this year? And if so, how much additional revenue could potentially accrue from these orders? And how might the $27 million come in? Will the sales be primarily recognized in the first half or second half of ‘25? And I have two follow-ups. Thank you.

Sure. It’s a great question. Maybe I am just going to back a little bit before I answer the question. I would say, I would remind you that a year ago, as we were thinking about the future of our business, we certainly focused on the international growth opportunity as an opportunity for us to continue to diversify our business. And fortunately, we are seeing exactly that happen. All told in the first quarter, we achieved about $91 million of international revenue. If you do the math on that, that’s about 40% of our overall revenue came from outside the U.S. and about 60% of our medical countermeasures revenue coming from outside the U.S. So, we do think that diversification is important. Second point, I would make certainly is that, as I mentioned in the call, we view this as an increasingly dangerous world out there. And I think many of the countries are looking at their needs for medical countermeasures and trying to make sure that they are prepared in the event something would happen.

Yes. So, it’s a 3-year contract. We will see exactly how it comes in, but I think it’s reasonable to assume that it could come in fairly evenly over those 3 years. So, for modeling purposes, I would be comfortable with that.

Sure. Great question. Probably the way I would answer it is that Emergent today, we are well positioned with our manufacturing network, and it is, as I mentioned previously, predominantly U.S. manufacturing or Canadian, but that is USMCA compliant. Do we have additional capacity for drug substance and fill finish for products, yes, it’s absolutely yes. So, we do have capacity. While I have previously said, the bioservices or contract manufacturing is not a focus. We certainly will look at that opportunistically as companies need help as they are transitioning back to the U.S., we certainly will look to help them, especially because, as I mentioned, we do have some capacity in those sites for both drug substance or API and also for fill and finish.

Yes. We will comment on the progress against the repurchase program each quarter, and we will just have to leave it at that at this point.

The only thing I would add is we are very pleased with the cash generation we have, and we will have to make decisions as to how best to utilize that cash for the multiple objectives that Rich talked about in the presentation. Operator, any other questions? Well, thank you everyone for joining us. With that, ladies and gentlemen, we now conclude the call. Thank you for your participation. Please note, there will be an archived version of today’s webcast as well as a PDF version of the slides used during today’s call will be available later today and accessible through the Investors landing page on the company website. Thank you again for joining us. We look forward to speaking with you all in the future. Goodbye everyone.

This concludes today’s conference call. Thank you for participating. You may now disconnect.