Emergent BioSolutions Inc. (EBS) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the 2020 Annual Meeting of Stockholders for the Emergent BioSolutions Inc. This meeting will be held in the virtual webcast format. [Operator Instructions] At this time, I would like to introduce the Executive Chairman of Emergent BioSolutions, Fuad El-Hibri. Mr. El-Hibri, you may begin.

Good morning, ladies and gentlemen. The 2020 Annual Meeting of Stockholders of Emergent BioSolutions is hereby called to order. I am Fuad El-Hibri, Executive Chairman of the Board of Emergent BioSolutions and Chair of the Strategic Operations Committee. I'm pleased to welcome you to our 2020 Annual Meeting of Stockholders. This year, for the safety and well-being of our stockholders and employees, we are pleased to be hosting a virtual Annual Meeting of Stockholders. Today, we have stockholders attending via the web portal. We will conduct the business portion of our meeting first followed by a question-and-answer session before concluding the meeting. For purposes of the question-and-answer session, questions may be asked by typing the question in the designated field on the web portal. Only validated shareholders will be permitted to ask questions. Emergent's Vice President of Investor Relations, Bob Burrows, will moderate the questions. Though we may not be able to answer every question, we will do our best to provide a response to as many as possible, and we'll address any unanswered questions on our corporate website shortly after the meeting. Out of consideration for others, please limit yourself to one question. Please note that this meeting is being recorded. However, no one attending via the webcast is permitted to use any audio recording device. All participants who have logged in this morning should be able to view a meeting agenda and rules of conduct on the web portal. We will conduct this annual meeting in accordance with that agenda and those rules. Participating today in our virtual Annual Meeting of Stockholders are the following members of our Board of Directors: Bob Kramer, our President and Chief Executive Officer.

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Ron Richard, our lead independent Director and Chair of our Nominating and Corporate Governance Committee.

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Dr. Sue Bailey.

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Dr. Zsolt Harsanyi, Chair of our Audit Committee.

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Dr. Jerry Hauer, Chair of our Scientific Review Committee.

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General George Joulwan.

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Dr. Lou Sullivan, Chair of our Compensation Committee.

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Dr. Kathy Zoon.

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And Seamus Mulligan.

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Thank you to all our directors who are attending this meeting. Before I proceed to introducing our other executive officers in attendance, I would like to acknowledge Seamus Mulligan, who is stepping down from the Board of Directors today, and thank him for his service to our Board and the company. Seamus' experience as the CEO of Adapt Pharma, which the company acquired in 2018, and his prior experience in integrating acquired companies were extremely valuable as we integrated our recently-acquired companies. I wish Seamus success in all his current and future endeavors. In addition to our directors, we have other officers of the company participating virtually. They include: Rich Lindahl, our Executive Vice President, Chief Financial Officer and Treasurer.

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And Atul Saran, our Executive Vice President, Corporate Development, General Counsel and Corporate Secretary. Mr. Saran will serve as the secretary of this meeting.

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Next, I would like to introduce Steve Canaras and [ Serem Kakes ], the representatives of Ernst & Young, our independent registered public accounting firm.

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Mr. Canaras and Ms. [ Kakes ] will be available during the question-and-answer session to respond to appropriate questions. Last, I would like to introduce Brian Millard, Senior Vice President, Corporate Controller, who has been appointed inspector of election for this annual meeting.

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As inspector of election, Mr. Millard is responsible for determining the number of votes represented in person or by proxy, the authenticity and validity of the proxies, the existence of a quorum and the number of votes cast on all matters. The inspector of election has taken the oath of office, which will be filed with the minutes of this meeting. As indicated in the notice of meeting and accompanying documents that were furnished to all stockholders of record as of March 26, 2020, this meeting is being held for the following purposes: One, to elect Dr. Zsolt Harsanyi, General George Joulwan and Dr. Louis Sullivan as Class II directors for the terms expiring at the 2023 Annual Meeting of Stockholders; two, to ratify the appointment by the Audit Committee of Ernst & Young as our independent registered public accounting firm for the fiscal year ending December 31, 2020; three, to cast an advisory vote to approve the compensation of our named executive officers; and four, to transact such other business as may properly come before this meeting. The polls for each matter will open when such matter is called to a vote and will remain open until I announce that the polls are closed. No ballots or proxies or revocations of or changes to ballots or proxies will be accepted after the polls are closed. Each stockholder of record at the close of business on March 26, 2020, the record date, has the right to vote his or her shares on all matters today. For ease of administration, unless you desire to change your vote, we urge stockholders who have already voted by proxy to allow their proxies to stand. For those stockholders who have not voted or who wish to change their vote, you may do so by clicking on the voting button on the web portal and following the instructions there. Stockholders who have sent in proxies or previously voted via telephone or Internet and do not wish to change their vote do not need to take any further action. Please note that if you hold your shares through a broker or otherwise not in your name as a stockholder of record, you'll need your unique control number that accompanied the instructions and proxy materials that the bank, broker or other nominee provided you with in order to vote virtually at the meeting. Before considering the business to come before the meeting, I'd like to ask Mr. Saran to announce the notice of mailing and present the report of the inspector of election. Mr. Saran?

Thank you, Mr. Chairman. I have received an affidavit from Broadridge Financial Solutions, our mailing agent and vote tabulator, certifying that the notice of the annual meeting and proxy statement were first furnished on or about April 9, 2020, to all stockholders of record as of March 26, 2020. This affidavit is available for inspection by any stockholder and will be annexed to the minutes of this meeting. We have a complete list of stockholders entitled to vote at this meeting. The list has been kept at the offices of our transfer agent and at the offices of the company, subject to inspection by stockholders. The list will also be available for inspection through the web portal during this meeting. I have been advised by Broadridge that as of the record date, there were 52,266,433 shares of common stock of the company outstanding and entitled to vote at the meeting. Holders of greater than 50,009,778 shares of the company's common stock are represented in person or by proxy. This represents more than a majority of the votes entitled to be cast at this meeting. Based upon this count, a quorum is present, and this annual meeting is lawfully convened and may proceed to transact business.

Thank you. The first order of business for this meeting is to consider and vote upon the election of Dr. Zsolt Harsanyi, General George Joulwan and Dr. Louis Sullivan as Class II Directors for the terms expiring at the 2023 Annual Meeting of Stockholders, each to serve until their successors are duly elected and qualified or until their prior deaths, resignation or removal. Information about each of the nominees is set forth in the proxy statement. The Board of Directors recommends a vote for each nominee for the reasons set forth in the proxy statement. I will now entertain a motion for the election of the Board of Directors' proposed nominees.

I so move.

I second the motion.

You have heard the motion to elect the Board of Directors' nominees. Voting will now take place on this matter. The polls for this matter are now open. [Voting]

The second item of business is the ratification of the appointment by the Audit Committee of Ernst & Young as our independent registered public accounting firm for the fiscal year ending December 31, 2020. Information about Ernst & Young can be found beginning on Page 27 of the proxy statement. The Board of Directors recommends a vote for the ratification of Ernst & Young as our independent registered public accounting firm for the reasons set forth in the proxy statement. I now ask for a motion on this matter.

I so move.

I second the motion.

You've heard the motion. Voting will now take place on this matter. The polls for this matter are now open. [Voting]

The third item of business is an advisory vote to approve the compensation of our named executive officers. Information regarding executive compensation can be found beginning on Page 33 of the proxy statement. The Board of Directors recommends a vote for the approval, on an advisory basis, of the compensation of our named executive officers for the reasons set forth in the proxy statement. I now ask for a motion to approve this matter.

I so move.

I second the motion.

You have heard the motion. Voting will now take place on this matter. The polls for this matter are now open. [Voting]

In accordance with our bylaws, these are the only matters of business which will be conducted at this meeting. We will be reporting the final vote results in a Form 8-K to be filed with the SEC within 4 business days. I now declare the polls closed. I will now ask the inspector of election to proceed with the canvassing of the votes. Mr. Saran, please present to us preliminary report of the inspector of election on today's balloting.

Brian Millard, as inspector of election, has notified me of the following: As to the first item of business, the election of Dr. Zsolt Harsanyi, General George Joulwan and Dr. Louis Sullivan as Class II directors. Each of the nominees has received a plurality of the votes cast and therefore has been elected as a Director of Emergent BioSolutions in accordance with the proposal. As to the second item of business, the proposal to ratify the selection by the Audit Committee of Ernst & Young as our independent registered public accounting firm for the year ending December 31, 2020. This proposal has received a majority of the votes cast and therefore has been passed. As to the third item of business, the advisory vote to approve the compensation of our named executive officers. This proposal has received a majority of the votes cast and therefore has been passed.

Mr. Millard, please file your final voting report with Mr. Saran to be annexed to the minutes of this meeting. Thank you. This completes the business to come before this annual meeting. I will now entertain a motion to adjourn. May I have a motion from the floor?

I so move.

I second the motion.

Thank you. This Annual Meeting of Stockholders is now adjourned. I now welcome your questions. We will begin with any questions that we received in advance of today's meeting, followed by any additional stockholder questions that have been asked today on the web portal. Please note that only questions that are germane to the meeting will be addressed. Mr. Burrows will read the questions, and Mr. Kramer and members of the executive management team will respond to the answers accordingly. Any appropriate questions that do not get answered during this virtual meeting will be addressed on our company website.

Thank you, Mr. Chairman. This is Mr. Burrows. With respect to questions prior to the meeting, none have been submitted. And as of this moment, we have not received any additional questions via the web portal. With that, I'll return the meeting back to you, Mr. Chairman.

Thank you, Mr. Burrows. Seeing no further questions, I would like to thank you for participating in the 2020 Annual Meeting of Stockholders of Emergent BioSolutions. Have a great day. Goodbye.

Ladies and gentlemen, this does conclude the program, and you may all disconnect. Everyone, have a great day.