GRRRRREAT Earnings
Nordion earns $180.42-million (U.S.) in Q3
2013-09-05 07:57 ET - News Release
Mr. Steve West reports
NORDION REPORTS THIRD QUARTER FISCAL 2013 FINANCIAL RESULTS
Nordion Inc. has provided results for the third quarter of fiscal 2013. The Company generated $71.7million in revenue for the third quarter fiscal 2013, an increase of $4.6 million, or 7%, over revenue of $67.1 million for the same period in fiscal 2012.
Nordion had GAAP net income of $180.4million in third quarter fiscal 2013, up $168.1million from GAAP net income of $12.3million in third quarter fiscal 2012, mainly due to the gain on the sale of the Targeted Therapies business. Excluding the specified items shown on the attached non-GAAP reconciliation table, adjusted net earnings for the third quarter decreased to $12.6 million from adjusted net income of $15.5 million during the same period in the previous fiscal year.
GAAP EPS was $2.91in third quarter fiscal 2013 versus $0.20EPS in the same period last year. Adjusted non-GAAP earnings per share in third quarter fiscal 2013 decreased to $0.20 compared with $0.25 non-GAAP earnings per share (EPS) in the third quarter of 2012.
"Nordion delivered solid results in its third quarter and we are on track towards achieving our expectations for fiscal 2013," said Mr. Steve West, Chief Executive Officer, Nordion Inc. "We've also made good progress with our strategic objectives in recent weeks, reducing uncertainty by resolving our outstanding liabilities with AECL."
Consolidated Financial ResultsGAAP Three months ended July 31 Nine months ended July 31 (thousands of U.S. dollars, except when noted) 2013 2012 % Change 2013 2012 % Change Revenues $ 71,709 67,141 7% $181,462 170,169 7% Gross margin 55% 55% - 54% 53% 1% Net income $180,424 12,302 1367% $180,886 14,636 1136% Diluted earnings per share $ 2.91 0.20 1355% $ 2.92 0.24 1117% Cash and cash equivalents $281,947 81,896 244% $281,947 81,896 244%
Subsequent to Third Quarter Fiscal 2013
Close of Divestiture of Targeted Therapies Business and Update on Use of Net Cash Proceeds
On July 13, 2013, Nordion completed the sale of its Targeted Therapies business to BTG plc (BTG). The Company received sale proceeds of $200.7 million in cash and realized net cash proceeds of approximately $190 million from this sale. In Q3 2013, Nordion recorded an after-tax gain of approximately $182 million for this sale.
Having considered potential methods of distributing the net cash proceeds from the sale of the Targeted Therapies business to shareholders, the overall tax implications for shareholders and the progress of the strategic review, Nordion currently intends to retain the net cash proceeds on the Company's balance sheet.
AECL Settlement
On August 20, 2013, Nordion announced that it had entered into a comprehensive settlement agreement with Atomic Energy of Canada Limited (AECL) to resolve the outstanding claims between both parties related to the MAPLE facilities. Under the terms of the settlement agreement, Nordion received $15 million in cash from AECL, and AECL has released its claim against Nordion of approximately CAD$47 million for arbitration costs. Nordion has correspondingly withdrawn its MAPLE-related lawsuit against AECL in relation to the Isotope Production Facilities Agreement (IPFA) and the parties have released each other from claims relating to the IPFA and related litigation. Nordion also announced that the parties had entered into an amended and restated isotope supply agreement having a term until October 31, 2016 and a waste management services agreement having a term until October 31, 2026. Please refer to the news release Nordion Reaches Settlement with AECL to Resolve MAPLE Lawsuits and Arbitration Costsfor more information. In third quarter fiscal 2013, Nordion recorded a $24.6 million recovery relating to AECL matters while reducing accrued liabilities by the same amount. The Company expects to record the $15 million cash settlement gain in fourth quarter fiscal 2013.
Third Quarter Fiscal 2013 Segment Results
Sterilization Technologies
Sterilization Technologies revenue for third quarter fiscal 2013 of $36.5 million increased by $4.4 million or 14%, compared with third quarter fiscal 2012. Revenue from Cobalt of $35.4 million in third quarter fiscal 2013 increased by $3.5 million or 11% due to the quarterly variability in the timing of Cobalt-60 shipments to the Company's customers.
Sterilization-Other revenue of $1.2 million increased by $0.9 million in third quarter fiscal 2013, compared with third quarter fiscal 2012 primarily due to an increase in production irradiator refurbishments performed.
Sterilization Technologies segment earnings of $17.8 million increased $3.4 million or 24% in third quarter fiscal 2013 compared with third quarter fiscal 2012 mainly due to higher revenues, partially offset by higher selling, general and administrative costs.
Medical Isotopes
Medical Isotopes revenue for third quarter fiscal 2013 of $24.0 million, increased by $2.1 million or 9%, compared with the same period in fiscal 2012. Reactor isotopes revenues of $16.1 million in third quarter fiscal 2013 increased by $1.6 million or 11%. The primary reactor in Europe used to supply certain of the Company's segment competitors was shut down from November 2012 until June 2013, which primarily contributed to the increase in revenue.
Cyclotron isotopes revenue of $5.4 million was $0.2 million or 4% higher in third quarter fiscal 2013, compared with the same period in fiscal 2012, primarily due to the return of Strontium-82 sales, which Nordion resumed in April 2013 after having halted production in May 2012. Contract manufacturing revenues increased slightly in third quarter 2013 reflecting the start of the TheraSphereAtrademark Manufacturing and Support Agreement in the second half of July 2013 following the sale of the Targeted Therapies business to BTG.
Medical Isotopes segment earnings of $5.9 million in third quarter fiscal 2013 increased $1.3 million or 29%, compared with third quarter fiscal 2012, mainly due to increased revenues across the product lines slightly offset by higher selling, general and administrative costs.
Targeted Therapies
Targeted Therapies revenue for third quarter fiscal 2013 of $11.1 million decreased by $1.9 million or 15%, compared with third quarter fiscal 2012. The decrease was largely attributable to the closing of the sale of the Targeted Therapies business to BTG on July 13, 2013.
Targeted Therapies segment earnings of $0.5 million in third quarter fiscal 2013 decreased $3.8 million or 87%, compared with third quarter fiscal 2012 primarily as a result of the Company's increased investment in TheraSpheresales and marketing, and an increase in general and administrative costs required to support the growth of the TheraSphere product.
Non-cash fixed asset impairment
Nordion recorded a non-cash pre-tax impairment charge of approximately $29 million in third quarter fiscal 2013 following the completion of the sale of the Targeted Therapies business. As of July 31, 2013, Nordion had an asset group with a carrying value of $38.4 million used in the Targeted Therapies and Medical Isotopes segments. The Company identified impairment indicators relating to the completion of the sale of the Targeted Therapies business, which significantly changed the previously estimated cash flows supporting this asset group.
Corporate and Other
The Corporate and Other segment incurred a loss of $4.7 million in third quarter fiscal 2013, which increased from a loss of $2.7 million in the third quarter fiscal 2012, primarily due to foreign exchange losses and the increase in general and administrative costs associated with central functions previously allocated to Targeted Therapies.
A full copy of Nordion's third quarter fiscal 2013 Management's Discussion and Analysis and the financial statements and notes can be downloaded at www.nordion.com/investors and is also available on SEDAR and EDGAR.
Conference Call
Nordion will hold a conference call on Thursday, September 5, 2013 at 10:00 am ET to discuss its third quarter fiscal 2013 results. This call will be webcast live at www.nordion.com, and will be available after the call in archived format at https://www.nordion.com/webcasts. Interested parties may access the live webcast of the conference call from the Nordion website at www.nordion.com. Participants will need to register for this call and provide their full name, company name, phone number and email address to obtain the conference call coordinates. Registered participants will join the call using the coordinates (phone number, passcode, & personal PIN) provided during the registration process. Please advise your participants to print the coordinates when registering. The Self Registration URL link is as follows:
https://selfreg6.bellconferia.ca/webportal3/reg.html?Acc=1790302020&Conf=125188
Caution Concerning Forward-Looking Statements
CONSOLIDATED STATEMENTS OF OPERATIONS[UNAUDITED] Three months ended Nine months ended July 31 July 31 (thousands of U.S. dollars, except per share amounts) 2013 2012 2013 2012 Revenues $ 71,709 $ 67,141 $ 181,462 $170,169 Costs and expenses Direct cost of revenues 32,024 30,384 84,040 80,428 Selling, general and administration 19,028 17,362 63,352 47,988 Depreciation and amortization 3,071 3,509 9,405 13,847 Restructuring (recovery) charges 35 (46) 87 (699) Change in fair value of embedded derivatives 288 1,992 494 8,417 Impairment on long lived assets 29,201 - 29,201 - Other (income) expenses, net (22,131) 1,098 (10,637) 5,909 Total costs and expenses 61,516 54,299 175,942 155,890 Gain on sale of Targeted Therapies (188,870) - (188,870) - Operating income 199,063 12,842 194,390 14,279 Interest expense (896) (1,197) (3,112) (3,489) Interest income 1,070 1,335 3,924 4,610 Income before income taxes 199,237 12,980 195,202 15,400 Income tax expense 18,813 678 14,316 764 Net income $ 180,424 $ 12,302 $ 180,886 $ 14,636 Basic and diluted earnings per share $ 2.91 $ 0.20 $ 2.92 $ 0.24 Please refer to the complete set of Consolidated Financial Statements for Q3 2013
We seek Safe Harbor.