- Revenue of $74.7 million in Q2 2014,
increased 33% from Q2 2013
- GAAP earnings per share (EPS) of
$0.11 in Q2 2014 versus $0.01 in Q2 2013. Non-GAAP adjusted EPS of
$0.22 in Q2 2014, up from non-GAAP adjusted EPS of $0.08 in Q2
2013
- 2014 fiscal year financial outlook
remains as previously announced
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 second quarter of fiscal 2014. The Company
generated $74.7 million in revenue for the second quarter of fiscal
2014, an increase of $18.6 million, or 33%, from revenue of $56.1
million for the same period in fiscal 2013. The 2014 fiscal year
financial outlook remains as previously announced on April 24,
2014.
Nordion had GAAP net income of $6.7 million in the second
quarter of fiscal 2014, compared with a GAAP net income of $0.7
million in the second quarter of fiscal 2013. Excluding the
specified items shown on the attached non-GAAP reconciliation
table, adjusted net income for the second quarter increased to
$13.5 million from adjusted net income of $4.8 million during the
same period in the previous fiscal year. GAAP EPS of $0.11 was
recorded in the second quarter of fiscal 2014 versus $0.01 in the
same period last fiscal year. Excluding the specified items shown
on the attached non-GAAP reconciliation table, second quarter
adjusted non-GAAP EPS increased to $0.22 compared with $0.08
non-GAAP EPS in the second quarter of fiscal 2013. Although not
adjusted in Nordion’s non-GAAP EPS, the U.S.-Canadian dollar
currency exchange fluctuations had a negative non-cash after-tax
impact of $0.08 per share on second quarter fiscal 2014 EPS.
“Nordion delivered strong results in its second quarter, in line
with our expectations,” said Mr. Steve West, Chief Executive
Officer, Nordion Inc. “We continue to focus and execute on
opportunities in both our Sterilization Technologies and Medical
Isotopes businesses.”
Consolidated Financial Results
GAAP Three months ended April 30 Six
months ended April 30 (thousands of U.S. dollars,
except when noted)
2014 2013 %
Change
2014 2013 % Change Revenues $
74,700 $ 56,089
33% $
145,520 $ 109,753 33% Gross margin
54%
53% 1%
53% 53% - Net income $
6,700 $ 731 817%
$
41,967 $ 462 8984% Diluted earnings per share $
0.11 $ 0.01 1000% $
0.68 $ 0.01 6700% Cash and
cash equivalents $
332,665 $ 81,534 308% $
332,665 $
81,534 308% Weighted average number of Common shares
outstanding – diluted (thousands of shares)
62,388
61,909 1%
62,195
61,909 -
Non-GAAP1
Three months ended April 30 Six
months ended April 30 (thousands of U.S. dollars, except when
noted)
2014 2013 % Change
2014 2013 % Change Adjusted net income $
13,475 $ 4,834 179% $
50,017 $ 7,712 549%
Adjusted diluted earnings per share $
0.22 $
0.08 175% $
0.80 $ 0.12 567%
1 See Non-GAAP reconciliation table at the end of this
release
Second Quarter Fiscal 2014 Segment Results
Sterilization TechnologiesSterilization Technologies
revenue for the second quarter of fiscal 2014 of $33.8 million
increased by $13.6 million or 67% compared with the second quarter
of fiscal 2013. Revenue from Cobalt of $33.7 million in the second
quarter of fiscal 2014 increased by $13.6 million or 68% from the
same period last year due to increased shipments of Cobalt-60
(Co-60). The increase was in-line with the Company’s previous
outlook and was attributable to increased shipments of Co-60,
higher sealed sources shipments and a shift in customer mix to
customers that pay a higher price for Co-60. These increases were
partially offset by unfavourable foreign exchange as a result of
the weakening Canadian dollar compared to the U.S. dollar.
Sterilization-Other revenue of $0.1 million remained relatively
flat in the second quarter of fiscal 2014, compared with the second
quarter of fiscal 2013.
As previously announced, Nordion has had increased requests for
shipments of incremental Co-60 during Q2 2014 from existing
customers for sites that Nordion does not typically supply, and
from certain new customers. Nordion has also become aware that a
competitor supplier has indicated that it is discontinuing supply
of Co-60. Nordion believes that the actual producer of the Co-60,
who previously provided Co-60 to the discontinuing supplier, is
maintaining or increasing its inventory of Co-60 and is
economically motivated to sell directly to customers or to find
another distribution partner for the sale of its Co-60. Nordion has
become aware that a number of its customers have been directly
approached regarding the supply of Co-60 and that some of Nordion’s
customers may have already ordered Co-60 from this source. The
Company believes this source has the infrastructure and licenses to
supply Co-60, replacing the previous supplier in whole or in part.
Nordion understands that the actual Co-60 producer is marketing its
supply of Co-60 and Co-60 supply from the actual Co-60 producer is
expected to re-enter the market; however, at this time, Nordion
cannot accurately determine when and to what extent the supply of
such Co-60 will replace the supply provided by the competitor who
is discontinuing its supply.
As previously indicated, Nordion currently expects Sterilization
Technologies revenues in fiscal 2014 to increase by approximately
35% to 40% compared with fiscal 2013, up from the Company’s
previous outlook of an increase of 10% to 15% due to the increased
requests for Co-60 in the second fiscal quarter and the change in
Co-60 global supply dynamics. The Company continues to believe that
this current increase in requests for shipments from Nordion is
likely not permanent.
Medical IsotopesMedical Isotopes revenue in the second
quarter of fiscal 2014 of $40.9 million, increased by $18.1 million
or 80%, compared with the second quarter of fiscal 2013. Reactor
isotopes revenue of $31.5 million in the second quarter of fiscal
2014 increased by $14.4 million, or 84%, 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.
As a result of the additional orders received due to competitor
supply disruptions, and as previously indicated, Nordion expects
fiscal 2014 revenue for Reactor isotopes to increase by
approximately 45% from the previous fiscal year, approximately 5%
higher than the Company’s previous fiscal 2014 outlook.
Cyclotron isotopes revenue of $4.7 million increased by $0.9
million, or 23%, in the second 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 $4.7 million increased by $2.9
million, or 163%, in the second quarter of fiscal 2014, compared
with the same period of the prior year mainly due to the contract
manufacturing of TheraSphere® for BTG plc subsequent to the sale of
the Targeted Therapies business in July 2013.
Corporate and OtherCorporate and Other segment loss was
$9.7 million in the second quarter of fiscal 2014, down $7.5
million compared with a segment loss of $2.2 million in the second
quarter of fiscal 2013. The increase primarily represents an
increase in G&A costs associated with central functions
previously allocated to Targeted Therapies, higher stock based
compensation primarily reflecting our share price increase and
retention incentives related to strategic review matters. This
increase was also attributable to foreign exchange losses in the
quarter as a result of the revaluation of Nordion’s cash and cash
equivalents in U.S. dollars held in a Canadian dollar functional
currency entity.
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.
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 InformationTo 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
strategic review costs, internal investigation costs, restructuring
charges, 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 StatementsThis 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 Company’s outlook on
Sterilization Technologies and the demand and supply dynamics of
Cobalt-60, including the discontinuance of a competitor’s supply of
Co-60 and the re-entry of such supply into the market; the
Company’s supply of and customer demand for reactor-based medical
isotopes; the Company’s forecasts and outlook, including with
respect to revenue for Sterilization Technologies and Reactor
isotopes; 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 2014
Management Information Circular (Circular) and our success in
anticipating and managing those risks. Our 2013 AIF, our 2014
Circular, 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)
Three months ended April 30
Six month ended April 30
(thousands of U.S. dollars, except per share amounts)
2014 2013 % Change
2014
2013 % Change
Revenues Sterilization Technologies $
33,818 $ 20,194 67% $
52,971 $ 36,624 45% Medical
Isotopes
40,882 22,745 80%
92,549 47,941 93% Targeted
Therapies
- 13,150 (100%)
-
25,188 (100%)
Consolidated segment revenues $
74,700 $ 56,089 33% $
145,520 $ 109,753 33%
Segment earnings (loss) Sterilization Technologies $
15,403 $ 6,415 140% $
22,477 $ 9,931 126% Medical
Isotopes
16,027 5,174 210%
41,085 12,113 239%
Targeted Therapies
- 1,062 (100%)
- 2,492 (100%)
Corporate and Other
(9,729) (2,210) (340%)
3,431 (5,027) 168%
Total segment
earnings $
21,701 $ 10,441 108% $
66,993 $ 19,509
243% Depreciation and amortization
2,579 3,054 (16%)
4,871 6,334 (23%) Restructuring charges, net
14 41
(66%)
57 52 10% Strategic review costs
7,632 616
1139%
8,463 616 1274% Internal investigation costs
1,151 4,510 (74%)
1,681 8,634 (81%) Change in fair
value of
embedded derivatives
268
493
(46%)
570
206
177%
AECL arbitration and legal costs
- 131 (100%)
- 633
(100%) Litigation settlement loss
- 1,300 (100%)
-
1,300 (100%) Pension settlement loss
- - -
- 7,003
(100%) Loss on Celerion note receivable
- - -
- 218
(100%) Recovery from previously
written off investments
-
(814)
(100%)
-
(814)
(100%)
Operating income (loss) $
10,057 $ 1,110 806% $
51,351 $ (4,673) (1199%) Net interest income
367 110 234%
878 638 38% Income tax (expense)
recovery
(3,724) (489) 662%
(10,262) 4,497 (328%)
Net income $
6,700 $ 731 817% $
41,967
$ 462 8984%
Non-GAAP Reconciliation
Three months ended April 30 Six
months ended April 30 (thousands of U.S. dollars, except per
share amounts)
2014 2013 % Change
2014 2013 % Change
Net income $
6,700 $ 731 817% $
41,967 $ 462 8984% Adjusted for
specified items: Strategic review costs
7,632 616 1139%
8,463 616 1274% Internal investigation costs
1,151
4,510 (74%)
1,681 8,634 (81%) Restructuring charges, net
14 41 (66%)
57 52 10% Change in fair value of
embedded derivatives
268 493 (46%)
570 206 177% AECL
arbitration and legal fees
- 131 (100%)
- 633 (100%)
Litigation settlement loss
- 1,300 (100%)
- 1,300
(100%) Recovery from previously written off
investments
- (814) (100%)
- (814) (100%) Loss on Celerion note
receivable
- - -
- 218 (100%) Pension settlement loss
- - -
- 7,003 (100%) Tax effect on specified items
listed above
(2,290) (1,690) 36%
(2,721) (4,598)
(41%) Change in reserve for uncertain tax positions
-
(4,805) (100%)
- (13,190) (100%) Provision to previously
filed returns
- 6,589 (100%)
- 5,652 (100%) Valuation
allowance on deferred tax assets
- (2,268)
(100%)
- 1,538 (100%)
Adjusted net
income $
13,475 $ 4,834 179% $
50,017 $ 7,712
549%
Diluted earnings per share $
0.11 $ 0.01
1000% $
0.68 $ 0.01 6700%
Adjusted diluted earnings per
share $
0.22 $ 0.08 175% $
0.80 $ 0.12 567%
Weighted average number of Common
shares outstanding – diluted
(thousands of shares)
62,388 61,909 1%
62,195 61,909 -
CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION
[UNAUDITED]
April 30 October 31 (thousands of U.S.
dollars, except share amounts)
2014 2013
ASSETS Current assets Cash and cash equivalents $
332,665 $ 323,099 Accounts receivable
41,195 29,456
Notes receivable
45,803 3,836 Inventories
39,192
47,371 Income taxes recoverable
942 834 Current portion of
deferred tax assets
653 619 Other current assets
4,226 2,783
Total current assets
464,676 407,998 Restricted cash
41,219 40,824
Property, plant and equipment, net
44,116 47,146 Deferred
tax assets
56,406 62,873 Long-term investments
1,450
1,450 Other long-term assets
17,789 56,760
Total assets $
625,656 $ 617,051
LIABILITIES AND
SHAREHOLDERS’ EQUITY Current liabilities Accounts
payable $
18,182 $ 25,458 Accrued liabilities
40,837
41,408 Income taxes payable
7,313 9,756 Current portion of
long-term debt
37,891 3,948 Current portion of deferred
revenue
1,745 1,720
Total current
liabilities 105,968 82,290 Long-term debt
174 36,493 Deferred revenue
- 842 Long-term income
taxes payable
2,060 2,067 Other long-term liabilities
38,191 35,783
Total liabilities
146,393 157,475
Shareholders’ equity
Common shares at par – Authorized shares: unlimited;
Issued and outstanding shares:
61,909,301
252,168 252,168 Additional paid-in capital
86,501
86,147 Accumulated retained earnings (deficit)
13,645
(28,322) Accumulated other comprehensive income
126,949 149,583
Total shareholders’ equity
479,263 459,576
Total liabilities and
shareholders’ equity $
625,656 $ 617,051
Please refer to the complete set of Consolidated Financial
Statements for Q2 2014
CONSOLIDATED STATEMENTS OF
OPERATIONS[UNAUDITED]
Three months ended Six months ended
April 30 April 30 (thousands of U.S.
dollars, except per share amounts)
2014 2013
2014 2013
Revenues $
74,700 $ 56,089 $
145,520 $ 109,753
Costs and expenses Direct cost of
revenues
34,617 26,157
67,987 52,016 Selling, general
and administration
21,378 23,091
35,815 44,324
Depreciation and amortization
2,579 3,054
4,871 6,334
Restructuring charges
14 41
57 52 Change in fair
value of embedded derivatives
268 493
570 206 Other
expenses (income), net
5,787 2,143
(15,131) 11,494
Total costs and expenses
64,643 54,979
94,169
114,426
Operating income (loss) 10,057 1,110
51,351 (4,673) Interest expense
(843) (893)
(1,624) (2,216) Interest income
1,210
1,003
2,502 2,854
Income (loss) before
income taxes 10,424 1,220
52,229 (4,035) Income
tax expense (recovery)
3,724 489
10,262 (4,497)
Net income $
6,700 $ 731
$
41,967 $ 462
Basic and diluted earnings per
share $
0.11 $ 0.01 $
0.68
$ 0.01
Please refer to the complete set of Consolidated Financial
Statements for Q2 2014
CONSOLIDATED STATEMENTS OF CASH
FLOWS
[UNAUDITED]
Three months ended
April 30
Six months ended
April 30
(thousands of U.S. dollars)
2014 2013
2014 2013
Operating activities Net income $
6,700 $ 731 $
41,967 $ 462 Adjustments to reconcile
net income to cash provided by
(used in) operating activities:
Items not affecting current cash flows
16,268 4,336
4,492 17,145 Changes in operating assets and liabilities
(6,726) (10,164)
(26,744)
(8,592) Cash provided by (used in) operating activities
16,242 (5,097)
19,715 9,015
Investing activities Purchase of property, plant and
equipment
(684) (855)
(3,005) (953) (Increase)
decrease in restricted cash
(3,601) 832
(3,177) (35,327) Cash used in investing activities
(4,285) (23)
(6,182)
(36,280)
Financing activities Cash used in financing
activities
- -
- - Effect
of foreign exchange rate changes on cash and cash equivalents
1,211 (860)
(3,967) (561)
Net increase (decrease) in cash and cash equivalents
during the period
13,168 (5,980)
9,566 (27,826) Cash and cash
equivalents, beginning of period
319,497
87,514
323,099 109,360
Cash and cash
equivalents, end of period $
332,665 $
81,534 $
332,665 $ 81,534
Please refer to the complete set of Consolidated Financial
Statements for Q2 2014
Nordion Inc.INVESTORS:Ana Raman,
613-595-4580investor.relations@nordion.comorMEDIA:Tamra Benjamin,
613-592-3400 ext. 1022tamra.benjamin@nordion.com
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