- Revenue of $70.8 million in Q1 2014,
increased 32% from Q1 2013
- GAAP earnings per share (EPS) of
$0.57 in Q1 2014 versus $nil in Q1 2013. Non-GAAP adjusted EPS of
$0.59 in Q1 2014, up from non-GAAP adjusted EPS of $0.05 in Q1
2013
- The US-Canadian dollar currency
exchange fluctuations had a positive non-cash after-tax impact of
$0.31 per share on Q1 2014 earnings
- Signed customer contracts for the
supply of strontium-82, molybdenum-99, and cobalt
Nordion reports in U.S. dollars unless otherwise
specified
Nordion Inc. (TSX:NDN) (NYSE:NDZ), a leading provider of
products and services to the global health science market, today
reported results for the first quarter of fiscal 2014. The Company
generated $70.8 million in revenue for the first quarter of fiscal
2014, an increase of $17.2 million, or 32%, from revenue of $53.7
million for the same period in fiscal 2013.
Nordion had GAAP net income of $35.3 million in the first
quarter of fiscal 2014, compared with a GAAP net loss of $0.3
million in the first quarter of fiscal 2013. Excluding the
specified items shown on the attached non-GAAP reconciliation
table, adjusted net income for the first quarter increased to $36.5
million from adjusted net income of $2.9 million during the same
period in the previous fiscal year. GAAP EPS of $0.57 were recorded
in the first quarter of fiscal 2014 versus $nil in the same period
last fiscal year. Excluding the specified items shown on the
attached non-GAAP reconciliation table, first quarter adjusted
non-GAAP EPS increased to $0.59 compared with $0.05 non-GAAP EPS in
the first quarter of fiscal 2013. The U.S.-Canadian dollar currency
exchange fluctuations had a positive non-cash after-tax impact of
$0.31 per share on first quarter fiscal 2014 EPS.
“Nordion continued to execute on its business objectives during
the first quarter, generating increased revenue and earnings over
last year,” said Mr. Steve West, Chief Executive Officer, Nordion
Inc. “We continue to maintain our focus on completing our strategic
review.”
Consolidated Financial Results
GAAP
Three months ended January 31
(thousands of U.S. dollars, except when noted)
2014
2013
% Change
Revenues $
70,820 $ 53,664 32% Gross
margin
53% 52% 1% Net income (loss) $
35,267 $
(269) n.m. Diluted earnings per share $
0.57 $
- 100% Cash and cash equivalents $
319,497 $
87,514 265%
Weighted average number of Common shares
outstanding –diluted (thousands of shares)
62,056 61,909 - n.m – not
meaningful
Non-GAAP1
Three months ended January 31
(thousands of U.S. dollars, except per share amounts)
2014 2013 % Change Adjusted net income $
36,542 $ 2,878 1170% Adjusted diluted
earnings per share $
0.59 $ 0.05 1080%
1 See Non-GAAP reconciliation table at the end of this news release
Strategic Review Update
During January 2013, Nordion initiated a review of strategic
alternatives with a view to enhancing shareholder value. In Q3
2013, Nordion announced in May and completed in July the sale of
the Targeted Therapies business to BTG plc (BTG), reaching the
conclusion of the first phase of the strategic review. During Q4
2013 and to date in fiscal 2014, Nordion continued to advance the
second phase of the review.
Completing the strategic review continues to be a priority for
Nordion in fiscal 2014. Certain decisions, including the use of the
Company’s current cash, are expected to be made as part of or once
the outcome of the strategic review has been finalized. While
Nordion cannot provide the current status of, or address the
timeline and potential results of the strategic review, the Company
is working diligently with the objective of reaching a successful
outcome.
Customer Contracts
In January 2014, Nordion signed a new two-year contract with
Bracco Diagnostics to supply strontium-82 (Sr-82). In February
2014, Nordion signed a three-year customer contract to supply
cobalt and a new one-year customer contract to supply molybdenum-99
(Mo-99), supporting the Company’s annual revenue outlook for
Medical Isotopes and Sterilization Technologies. These contracts
include minimum purchase commitments, and the forecast revenues are
reflected in Nordion’s fiscal 2014 financial outlook.
First Quarter Fiscal 2014 Segment Results
Sterilization Technologies
Sterilization Technologies revenue for the first quarter of
fiscal 2014 of $19.2 million increased by $2.7 million or 17%
compared with the first quarter of fiscal 2013. Revenue from Cobalt
of $19.0 million in the first quarter of fiscal 2014 increased by
$3.6 million or 24% from the same period last year due to increased
shipments of Cobalt-60 (Co-60), including sealed sources, and a
shift in customer mix to customers that pay a higher price for
Co-60. These increases were partially offset by unfavorable foreign
exchange as a result of the weakening Canadian dollar compared to
the U.S. dollar.
Sterilization-Other revenue of $0.2 million decreased by $0.9
million or 85% in the first quarter of fiscal 2014, compared with
the first quarter of fiscal 2013 primarily due to a decrease in
production irradiator refurbishments.
Medical Isotopes
Medical Isotopes revenue in the first quarter of fiscal 2014 of
$51.7 million, increased by $26.5 million or 105%, compared with
the first quarter of fiscal 2013. Reactor isotopes revenue of $40.4
million in the first quarter of fiscal 2014 increased by $20.0
million or 98% from the same period last year primarily due to
additional orders of Mo-99 received as a result of supply
interruptions affecting some of Nordion’s competitors. The primary
reactor in Europe that supplies certain of the Company’s
competitors was shutdown in October 2013 and returned to service in
February 2014. In addition, a competitor in South Africa that
supplies Mo-99 returned to service in January 2014 after its supply
interruption that started in November 2013. Additional orders
resulting from these shutdowns had a positive impact on Reactor
isotopes revenue of approximately $26 million in the first quarter
of fiscal 2014.
As a result of the additional orders received due to competitor
supply disruptions, Nordion expects fiscal 2014 revenue for Reactor
isotopes to increase by approximately 40% from the previous fiscal
year, which is at the top end of the 30 to 40% range initially
forecasted for fiscal 2014.
Cyclotron isotopes revenue of $6.5 million increased by $3.6
million, or 128%, in the first quarter of fiscal 2014, compared
with the same period of the prior year primarily due to an increase
of Sr-82 sales, which Nordion resumed selling in April 2013.
Contract Manufacturing revenue of $4.8 million increased by $2.8
million, or 146%, in the first quarter of fiscal 2014, compared
with the same period of the prior year mainly due to the contract
manufacturing of TheraSphere® for BTG subsequent to the sale of the
Targeted Therapies business in July 2013. Nordion discontinued the
sale of Bexxar® for GSK in February 2014, subsequent to the
Company’s first fiscal quarter.
For fiscal 2014, Nordion expects Contract Manufacturing revenue
to be approximately $20 million, as a result of $13 million in
expected revenue for the manufacture of TheraSphere, and $7 million
in expected revenue for the contract manufacture of Bexxar and the
close out of the Bexxar manufacturing agreement. The Company’s
forecast for TheraSphere decreased from $14 million to $13 million
due to the negative impact of the weakening Canadian dollar.
Corporate and Other
Corporate and Other segment earnings was $13.2 million in the
first quarter of fiscal 2014, up $16.0 million compared with a
segment loss of $2.8 million in the first quarter of fiscal 2013.
The increase primarily represents foreign exchange gains during the
first quarter of fiscal 2014 resulting from a revaluation of
Nordion’s cash and cash equivalents in U.S. dollars held in a
Canadian dollar functional currency entity. This foreign exchange
gain was partially offset by an increase in general and
administrative costs associated with central functions previously
allocated to the divested Targeted Therapies business, and higher
stock-based compensation expense primarily reflecting the increase
in the Company’s stock price.
Foreign exchange impact
Nordion recorded foreign exchange gains of $20.9 million
resulting from a revaluation of our cash and cash equivalents in
U.S. dollars held in the Company’s Canadian dollar functional
currency entity. At the end of the first quarter of fiscal 2014,
Nordion held over $300 million of cash and cash equivalents in U.S.
dollars, including approximately $200 million in U.S. dollar cash
proceeds from the sale of the Targeted Therapies business. Nordion
recorded a non-cash gain of approximately $19 million related to
this U.S. cash and cash equivalent balance as a result of the U.S.
dollar strengthening approximately 7% compared to the Canadian
dollar during the quarter. The remainder of the foreign exchange
gain was a result of other net U.S. dollar denominated assets and
liabilities, which primarily relates to U.S. dollar accounts
receivable. The offset to these non-cash revaluation gains is
reflected as foreign currency translation loss in accumulated other
comprehensive income as part of shareholders’ equity. Therefore,
these foreign exchange gains do not affect Nordion’s reported cash
and cash equivalents balance or the Company's total shareholders’
equity.
AGM Update
The 2014 AGM is scheduled to take place on Tuesday, April 29,
2014. The shareholder record date for the AGM is Wednesday, March
26, 2014.
A full copy of Nordion’s first quarter fiscal 2014 Management’s
Discussion and Analysis and the financial statements and notes can
be downloaded at www.nordion.com/investors.
Conference Call
Nordion will hold a conference call on Friday, March 7, 2014 at
10:00 am ET to discuss its first quarter fiscal 2014 results. This
call will be webcast live at www.nordion.com, and will be available
after the call in archived format at
http://www.nordion.com/webcasts. To participate, please dial
1-866-223-7781 (toll-free North America) or 1-416-340-2216
(International).
About Nordion Inc.
Nordion Inc. (TSX:NDN) (NYSE:NDZ) is a global health science
company that provides market-leading products used for the
prevention, diagnosis and treatment of disease. We are a leading
provider of medical isotopes and sterilization technologies that
benefit the lives of millions of people in more than 40 countries
around the world. Our products are used daily by pharmaceutical and
biotechnology companies, medical-device manufacturers, hospitals,
clinics and research laboratories. Nordion has over 400 highly
skilled employees in three locations. Find out more at
www.nordion.com and follow us at twitter.com/NordionInc.
Non-GAAP Information
To supplement the financial measures prepared in accordance with
generally accepted accounting principles (GAAP), the company uses
non-GAAP financial measures such as adjusted net income and
adjusted earnings per share. Non-GAAP financial measures exclude
certain items, such as restructuring charges, strategic review
costs, internal investigation costs, AECL arbitration and legal
fees, pension settlement loss, loss on Celerion note receivable,
change in fair value of embedded derivatives, and tax effects on
adjusted items. Management uses non-GAAP financial measures
internally for strategic decision making, forecasting future
results and evaluating current performance. By disclosing non-GAAP
financial measures, management intends to provide investors with a
meaningful, consistent comparison of the company's core operating
results and trends for the periods presented. Non-GAAP financial
measures are not prepared in accordance with GAAP. Therefore, the
information is not necessarily comparable to other companies and
should be considered as a supplement to, not a substitute for, or
superior to, the corresponding measures calculated in accordance
with GAAP.
Caution Concerning Forward-Looking Statements
This release contains forward-looking statements, within the
meaning of certain securities laws, including under applicable
Canadian securities laws and the “safe harbour” provisions of the
United States Private Securities Litigation Reform Act of 1995.
These forward-looking statements include, but are not limited to,
statements relating to our expectations with respect to: the timing
and outcome of our current strategic review and decisions to be
made thereafter;; the Company’s AGM; the strategic review and
objectives; the Company’s forecasts and outlook, including with
respect to revenue for Sterilization Technologies, Reactor
isotopes, and Contract Manufacturing (including TheraSphere and
Bexxar); and more generally statements with respect to our beliefs,
plans, objectives, expectations, anticipations, estimates and
intentions. The words “may”, “will”, “could”, “should”,
“would”, “outlook”, “believe”, “plan”, “anticipate”, “estimate”,
“project”, “expect”, “intend”, “indicate”, “forecast”, “objective”,
“optimistic”, and similar words and expressions are also intended
to identify forward-looking statements. Forward-looking statements
are necessarily based on estimates and assumptions made by us in
light of our experience and our perception of historical trends,
current conditions and expected future developments, as well as
other factors that we believe are appropriate in the circumstances,
but which are inherently subject to significant business,
political, economic, regulatory and competitive uncertainties and
contingencies. Known and unknown factors could cause actual results
to differ materially from those projected in the forward-looking
statements. Accordingly, this release is subject to the disclaimer
and qualified by the assumptions, qualifications and risk factors
referred to in our 2013 Annual Information Form (AIF) and our
success in anticipating and managing those risks. Our 2013 AIF and
our other filings with the Canadian provincial securities
commissions and the US Securities and Exchange Commission are
available on SEDAR at www.sedar.com, on EDGAR at www.sec.gov, and
on Nordion’s website at www.nordion.com. We caution readers not to
place undue reliance on the Company’s forward-looking statements,
as a number of factors could cause our actual results, performance
or achievements to differ materially from the beliefs, plans,
objectives, expectations, anticipations, estimates and intentions
expressed in such forward-looking statements. The
forward-looking statements contained in this news release are made
as of the date of this release and, accordingly, are subject to
change after such date. The Company does not assume any obligation
to update or revise any forward-looking statements, whether written
or oral, that may be made from time to time by us or on our behalf,
except as required by applicable law.
Segment Financial Results (with
reconciliation to net income (loss))
Three months ended January 31
(thousands of U.S. dollars)
2014 2013 %
Change
Revenues Sterilization
Technologies $
19,153 $ 16,430 17% Medical Isotopes
51,667 25,196 105% Targeted Therapies
-
12,038 (100%)
Consolidated segment
revenues $
70,820 $ 53,664 32%
Segment earnings (loss) Sterilization Technologies $
7,074 $ 3,516 101% Medical Isotopes
25,058 6,939 261%
Targeted Therapies
- 1,430 (100%) Corporate and Other
13,160 (2,817) 567%
Total
segment earnings $
45,292 $ 9,068
399% Depreciation and amortization
2,292 3,280 (30%)
Restructuring charges, net
43 11 291% Strategic review costs
831 - 100% Internal investigation costs
530 4,124
(87%) AECL arbitration and legal costs
- 502 (100%) Pension
settlement loss
- 7,003 (100%) Loss on Celerion note
receivable
- 218 (100%) Change in fair value of embedded
derivatives
302 (287)
(205%)
Consolidated operating income (loss) $
41,294 $ (5,783) 814% Net interest
income
511 528 (3%) Income tax (expense) recovery
(6,538) 4,986 (231%)
Net
income (loss) $
35,267 $ (269) n.m.
n.m. non-meaningful
Non-GAAP Reconciliation
Three months ended January 31 (thousands of U.S.
dollars, except per share amounts)
2014 2013
% Change
Net income (loss) $
35,267
$ (269) n.m. Adjusted for specified items: Strategic
review costs
831 - 100% Internal investigation costs
530 4,124 (87%) Change in fair value of embedded derivatives
302 (287) (205%) Restructuring charges, net
43 11
291% Pension settlement loss
- 7,003 (100%) AECL arbitration
and legal fees
- 502 (100%) Loss on Celerion note receivable
- 218 (100%) Tax effect on specified items listed above
(431) (2,908) (85%) Change in reserve for uncertain tax
positions
- (8,385) (100%) Provision to previously filed tax
returns
- (937) (100%) Valuation allowance on deferred tax
assets
- 3,806 (100%)
Adjusted net income $
36,542 $ 2,878
1170%
Diluted earnings per share $
0.57
$ - 100%
Adjusted diluted earnings per share $
0.59 $
0.05 1080%
Weighted average number of
Commonshares outstanding – diluted (thousands of
shares)
62,056 61,909 - n.m.
non-meaningful
CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION
[UNAUDITED]
January 31 October 31 (thousands of U.S.
dollars, except share amounts)
2014 2013
ASSETS Current assets Cash and cash equivalents $
319,497 $ 323,099 Accounts receivable
32,662 29,456
Notes receivable
3,591 3,836 Inventories
45,921
47,371 Income taxes recoverable
928 834 Current portion of
deferred tax assets
642 619 Other current assets
6,193 2,783
Total current assets
409,434 407,998 Restricted cash
37,795 40,824
Property, plant and equipment, net
44,486 47,146 Deferred
tax assets
58,097 62,873 Long-term investments
1,450
1,450 Other long-term assets
59,970
56,760
Total assets $
611,232 $
617,051
LIABILITIES AND SHAREHOLDERS’ EQUITY Current
liabilities Accounts payable $
21,175 $ 25,458 Accrued
liabilities
38,803 41,408 Income taxes payable
8,764
9,756 Current portion of long-term debt
3,750 3,948 Current
portion of deferred revenue
1,382
1,720
Total current liabilities 73,874 82,290
Long-term debt
34,898 36,493 Deferred revenue
641 842 Long-term income taxes payable
2,058 2,067
Other long-term liabilities
35,635
35,783
Total liabilities 147,106
157,475
Shareholders’ equity
Common shares at par – Authorized shares:
unlimited;Issued and outstanding shares: 61,909,301
252,168 252,168 Additional paid-in capital
86,331
86,147 Accumulated retained earnings (deficit)
6,945
(28,322) Accumulated other comprehensive income
118,682 149,583
Total shareholders’
equity 464,126 459,576
Total liabilities and shareholders’ equity $
611,232 $ 617,051
Please refer to the complete set of
Consolidated Financial Statements for Q1 2014
CONSOLIDATED STATEMENTS OF
OPERATIONS
[UNAUDITED] Three months ended January 31 (thousands
of U.S. dollars, except per share amounts)
2014
2013
Revenues $
70,820 $ 53,664
Costs and
expenses Direct cost of revenues
33,370 25,859
Selling, general and administration
14,437 21,233
Depreciation and amortization
2,292 3,280 Restructuring
charges, net
43 11 Change in fair value of embedded
derivatives
302 (287) Other (income) expenses, net
(20,918) 9,351
Total costs and expenses
29,526 59,447
Operating income
(loss) 41,294 (5,783) Interest expense
(781)
(1,323) Interest and dividend income
1,292
1,851
Income (loss) before income taxes 41,805
(5,255) Income tax expense (recovery)
6,538
(4,986)
Net income (loss) $
35,267 $
(269)
Basic and diluted earnings per share $
0.57 $ -
Please refer to the complete set of
Consolidated Financial Statements for Q1 2014
CONSOLIDATED STATEMENTS OF CASH FLOWS
[UNAUDITED] Three months ended January 31
(thousands of U.S. dollars)
2014
2013
Operating activities Net income (loss) $
35,267 $ (269) Adjustments to reconcile net income (loss) to
cash provided by operating activities: Items not affecting current
cash flows
(11,776) 12,809 Changes in operating assets and
liabilities
(20,018) 1,572 Cash
provided by operating activities
3,473
14,112
Investing activities Purchase of property,
plant and equipment
(2,321) (98) Decrease (increase) in
restricted cash
424 (36,159)
Cash used in investing activities
(1,897)
(36,257)
Financing activities Cash used in
financing activities
- - Effect
of foreign exchange rate changes on cash and cash equivalents
(5,178) 299
Net decrease in
cash and cash equivalents during the period (3,602)
(21,846) Cash and cash equivalents, beginning of period
323,099 109,360
Cash and cash
equivalents, end of period $
319,497 $
87,514
Please refer to the complete set of
Consolidated Financial Statements for Q1 2014
Nordion Inc.INVESTORS:Ana Raman,
613-595-4580investor.relations@nordion.comorMEDIA:Tamra
Benjamin, 613-592-3400 x 1022tamra.benjamin@nordion.com
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