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Press release from Business Wire

Nordion Reports First Quarter Fiscal 2013 Financial Results

Tuesday, March 05, 2013

Nordion Reports First Quarter Fiscal 2013 Financial Results17:00 EST Tuesday, March 05, 2013 OTTAWA, Ontario (Business Wire) -- Nordion Inc. (TSX: NDN) (NYSE: NDZ: Revenue of $53.7 million in Q1 2013, an increase of 1% over Q1 2012Adjusted earnings per share, excluding specified items, decreased to $0.07 in Q1 2013, down from adjusted earnings per share of $0.11 in the first quarter fiscal 2012TheraSphere revenue of $12.0 million in Q1 2013, an increase of 9% over Q1 2012Nordion 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 2013. The Company generated $53.7 million in revenue for the first quarter fiscal 2013, an increase of $0.6 million, or 1%, over revenue of $53.0 million for the same period in fiscal 2012. Excluding the specified items shown on the attached non-GAAP reconciliation table, adjusted net income for the first quarter decreased to $4.1 million from adjusted net income of $7.1 million during the same period in the previous fiscal year. Nordion had a GAAP net loss of $0.3 million in first quarter fiscal 2013, which improved by $0.6 million from a GAAP net loss of $0.9 million in the first quarter fiscal 2012. First quarter fiscal 2013 adjusted non-GAAP earnings per share (EPS) decreased to $0.07 compared with $0.11 non-GAAP EPS in the first quarter of 2012. GAAP EPS was nil in the first quarter of 2013 versus a $0.01 loss per share in the same period last year. “Nordion reported solid Q1 results with our Targeted Therapies, Sterilization Technologies and Medical Isotopes businesses turning in good performances,” said Mr. Steve West, Chief Executive Officer, Nordion Inc. “We remain focused on executing our business strategy and building long-term value for shareholders.” Consolidated Financial ResultsGAAP     Three months ended January 31(thousands of U.S. dollars, except when noted)   2013   2012   % Change Revenues $ 53,664 53,015 1%   Gross margin 52% 52% -   Net loss $ (269) (887) 70%   Diluted loss per share $ - (0.01) 100%   Cash and cash equivalents $ 87,514 71,166 23%   Weighted average number of Common shares outstanding – diluted (thousands of shares)   61,909 62,247 (1%) Non-GAAP1     Three months ended January 31(thousands of U.S. dollars, except when noted)       2013       2012   % Change Adjusted net income   $   4,100       7,125   (42%)   Adjusted diluted earnings per share   $   0.07       0.11   (36%) 1 See Non-GAAP reconciliation table at the end of this release Q1 2013 Key Events On January 28, 2013, Nordion announced it had engaged Jefferies & Company to advise and assist in a review of strategic alternatives for the Company to enhance shareholder value and create new opportunities. On January 25, 2013, Nordion entered an $80 million Amended and Restated senior secured credit facility agreement with the Toronto-Dominion Bank and a select group of other financial institutions. On January 21, 2013, Nordion filed an amended statement of claim against Atomic Energy of Canada Limited (AECL) in the Ontario Superior Court of Justice with regards to the Isotope Production Facilities Agreement. Review of Strategic Alternatives During its first quarter fiscal 2013, Nordion announced it had initiated a review of strategic alternatives with a view to enhancing shareholder value and creating new opportunities for the Company. Jefferies & Company has been engaged to advise and assist in this review. No decision has been made to enter into any specific strategic transaction or any other strategic alternative at this time, and there can be no assurance that Nordion will enter into a transaction in the future. The Company does not plan to disclose or comment on developments regarding the strategic review process until further disclosure is deemed appropriate. Nordion intends to continue with planned business activities throughout the strategic alternatives review process. First Quarter Fiscal 2013 Segment Results Following the strategic organizational realignment announced on September 12, 2012, the sole product that is now reported in Targeted Therapies is Nordion's innovative liver cancer treatment, TheraSphere®. Contract Manufacturing is now reported under Medical Isotopes. Targeted Therapies TheraSphere® revenue for first quarter fiscal 2013 of $12.0 million increased by $1.0 million or 9% compared with first quarter fiscal 2012 primarily due to adoption in new clinics. Nordion expects growth in the second half of fiscal 2013 to be stronger than in the first half of the year and continues to forecast annual growth in the mid-teen percent range. TheraSphere segment earnings of $1.4 million in first quarter fiscal 2013 decreased $1.7 million or 54%, compared with first quarter fiscal 2012 mainly due to higher spend for TheraSpheresales and marketing activities and supporting functions, as well as increased research and development spending related to the Company's Phase III clinical trials. Sterilization Technologies Sterilization Technologies revenue for first quarter fiscal 2013 of $16.4 million increased by $0.3 million or 2% compared with first quarter fiscal 2012. Revenue from Cobalt of $15.4 million in first quarter fiscal 2013 decreased by $0.3 million or 2% due to quarterly variability of timing of shipments to our customers and the relative difference in mix of customers in each respective period. Sterilization-Other revenue of $1.1 million increased by $0.6 million or 133% in first quarter fiscal 2013, compared with first quarter fiscal 2012 due to an increase in refurbishment work performed on existing production irradiators. Sterilization Technologies segment earnings of $3.5 million decreased $0.9 million or 21% in first quarter fiscal 2013 compared with first quarter fiscal 2012 mainly due to lower Cobalt sales volumes covering slightly higher production support costs as well as higher pension related costs. Medical Isotopes Medical Isotopes revenue for first quarter fiscal 2013 of $25.2 million decreased by $0.7 million or 3% compared with first quarter fiscal 2012. Reactor isotopes revenue of $20.4 million in first quarter fiscal 2013, decreased by $0.5 million or 3% primarily due to decreases in the price of Molybdenum-99 (Mo-99) from Nordion's largest customer, which was partially offset by additional orders resulting from the shutdown of the primary reactor in Europe that usually supplies certain of the Company's competitors. Based on the additional orders resulting from this shutdown, Nordion expects its forecasted decline in Medical Isotopes revenue to be in the mid-teen percentage range compared to the Company's original annual forecast of a 20% decline for fiscal 2013. Cyclotron isotopes revenues were lower by 8% for Q1 2013 compared to the same period in fiscal 2012 primarily due to lower customer demand for Iodine-123. Contract manufacturing revenues were higher by 6% for Q1 2013 compared to the same period in fiscal 2012 due to higher sales price for Bexxar®, a Glaxo Smith Kline product. Medical Isotopes segment earnings of $6.9 million in first quarter fiscal 2013 decreased $0.8 million or 10% compared with first quarter fiscal 2012 mainly due to lower sales volume and price of Mo-99. Corporate and Other Corporate and Other segment loss was $2.8 million in first quarter fiscal 2013, increased by $0.9 million or 47%, compared with the first quarter fiscal 2012. The quarterly increase in loss reflected a foreign exchange gain the Company recorded in first quarter fiscal 2012. A full copy of Nordion's first quarter fiscal 2013 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 Wednesday, March 6, 2013 at 9:30 am ET to discuss its first 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 http://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: http://selfreg6.bellconferia.ca/webportal3/reg.html?Acc=1790302020&Conf=124979 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 targeted therapies, sterilization technologies, and medical isotopes that benefit the lives of millions of people in more than 60 countries around the world. Our products are used daily by pharmaceutical and biotechnology companies, medical-device manufacturers, hospitals, clinics and research laboratories. Nordion has approximately 500 highly skilled employees worldwide. Find out more at www.nordion.com and follow us at http://twitter.com/NordionInc. Caution Concerning Forward-Looking Statements This releasecontains forward-looking statements, within the meaning of applicable 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 statements can be identified by expressions of belief, expectation or intention, as well as those statements that are not historical fact. 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 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 2012 Annual Information Form (AIF). Factors that could cause actual results or events to differ materially from current expectations include, but are not limited to, fluctuations in supply and demand, pricing pressures and rising costs, changes in currency and exchange rates and potential adverse developments in new and pending legal proceedings or regulatory investigations,as well asthe risk factors which are described in section 5 of our 2012 AIF and in our other filings with the Canadian provincial securities commissions and the US Securities and Exchange Commission, and our success in anticipating and managing those risks. 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 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. 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 and recovery, change in fair value of embedded derivatives, AECL arbitration and legal fees, loss and gains on sales of investments, loss or gains on discontinued operations, 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. Segment Financial Results (with reconciliation to net loss)   Three months ended January 31(thousands of U.S. dollars, except per share amounts)       2013       2012   % Change   Revenues                       Targeted Therapies   $   12,038   $   11,012   9% Sterilization Technologies 16,430 16,136 2% Medical Isotopes       25,196       25,867   (3%) Consolidated segment revenues from continuing operations   $   53,664   $   53,015   1%   Segment earnings (loss) Targeted Therapies $ 1,430 $ 3,113 (54%) Sterilization Technologies 3,516 4,454 (21%) Medical Isotopes 6,939 7,711 (10%) Corporate and Other       (2,817)       (1,915)   (47%) Total segment earnings   $   9,068   $   13,363   (32%)   Depreciation and amortization 3,280 5,180 (37%) Restructuring charges, net 11 (648) 102% AECL arbitration and legal costs 502 1,878 (73%) Pension settlement loss 7,003 - 100% Internal investigation costs 4,124 - 100% Change in fair value of embedded derivatives (287) 6,254 (105%) Loss on Celerion note receivable       218       2,411   (91%) Consolidated operatingloss   $   (5,783)   $   (1,712)   (238%)   Net interest income 528 607 (13%) Income tax recovery       4,986       218   2187% Net loss   $   (269)   $   (887)   70% Non-GAAP Reconciliation   Three months ended January 31(thousands of U.S. dollars, except per share amounts)       2013       2012   % Change Net (loss) income   $   (269)   $   (887)   70% Adjusted for specified items: Restructuring charges, net 11 (648) 102% Change in fair value of embedded derivatives (287) 6,254 (105%) AECL arbitration and legal fees 502 1,878 (73%) Internal investigation costs 4,124 - 100% Loss on Celerion note receivable 218 2,411 (91%) Pension settlement loss 7,003 - 100% Tax effect on specified items listed above (2,907) (1,883) (54%) Change in reserve for uncertain tax positions (8,101) - (100%) Valuation allowance on deferred tax assets       4,465       -   100% Adjusted net income   $   4,100   $   7,125   (42%)   Diluted (loss) earnings per share- (0.01) 100% Adjusted diluted earnings per share0.07 0.11 (36%) Weighted average number of Commonshares outstanding – diluted (thousands of shares)       61,909       62,247   (1%) CONSOLIDATED STATEMENTS OF FINANCIAL POSITION[UNAUDITED]       January 31   October 31 (thousands of U.S. dollars, except share amounts)       2013   2012 ASSETS         Current assets Cash and cash equivalents $ 87,514 $ 109,360 Accounts receivable 34,759 46,488 Notes receivable 4,011 4,004 Inventories 39,717 33,977 Income taxes recoverable 17,013 23,951 Current portion of deferred tax assets 4,150 4,141 Other current assets       4,618       2,042 Total current assets191,782 223,963   Restricted cash 40,254 3,906 Property, plant and equipment, net 84,679 88,217 Deferred tax assets 52,383 52,855 Long-term investments 1,450 1,450 Other long-term assets       51,583       58,190   Total assets   $   422,131   $   428,581   LIABILITIES AND SHAREHOLDERS' EQUITYCurrent liabilities Accounts payable $ 13,527 $ 18,783 Accrued liabilities 78,552 80,322 Income taxes payable 7,432 9,494 Current portion of long-term debt 4,178 4,190 Current portion of deferred revenue       1,256       1,500 Total current liabilities104,945 114,289   Long-term debt 39,937 39,141 Deferred revenue 1,686 1,958 Long-term income taxes payable 3,960 3,960 Other long-term liabilities       70,790       74,468 Total liabilities       221,318       233,816   Shareholders' equity Common shares at par – Authorized shares: unlimited; Issued and outstanding shares: 61,909,101 252,168 252,168 Additional paid-in capital 85,118 84,726 Accumulated deficit (265,741) (265,474) Accumulated other comprehensive income       129,268       123,345 Total shareholders' equity       200,813       194,765 Total liabilities and shareholders' equity   $   422,131   $   428,581 Please refer to the complete set of Consolidated Financial Statements for Q1 2013CONSOLIDATED STATEMENTS OF OPERATIONS[UNAUDITED]Three months ended January 31(thousands of U.S. dollars, except per share amounts)       2013   2012 Revenues   $   53,664   $   53,015 Costs and expenses         Direct cost of revenues 25,859 25,458 Selling, general and administration 21,233 16,045 Depreciation and amortization 3,280 5,180 Restructuring charges (recovery), net 11 (648) Change in fair value of embedded derivatives (287) 6,254 Other expenses, net       9,351       2,438 Total costs and expenses       59,447       54,727 Operating loss(5,783) (1,712) Interest expense (1,323) (1,173) Interest and dividend income       1,851       1,780 Loss before income taxes(5,255) (1,105) Income tax recovery       (4,986)       (218) Net loss   $   (269)   $   (887)   Basic and diluted loss per share   $   -   $   (0.01) Please refer to the complete set of Consolidated Financial Statements for Q1 2013CONSOLIDATED STATEMENTS OF CASH FLOWS[UNAUDITED]   Three months ended January 31(thousands of U.S. dollars)       2013       2012 Operating activities         Net loss $ (269) $ (887) Adjustments to reconcile net loss to cash provided by operating activities: Items not affecting current cash flows 12,809 8,004 Changes in operating assets and liabilities       1,572       2,268 Cash provided by operating activities       14,112       9,385 Investing activities Purchase of property, plant and equipment (98) (2,311) (Increase) decrease in restricted cash       (36,159)       300 Cash used in investing activities       (36,257)       (2,011) Financing activities Payment of cash dividends - (6,238) Repurchase and cancellation of Common shares       -       (3,521) Cash used in financing activities       -       (9,759) Effect of foreign exchange rate changes on cash and cash equivalents       299       (516) Net decrease in cash and cash equivalents during the period(21,846) (2,901) Cash and cash equivalents, beginning of period       109,360       74,067 Cash and cash equivalents, end of period   $   87,514   $   71,166 Please refer to the complete set of Consolidated Financial Statements for Q1 2013 Nordion Inc.INVESTORS:Ana Raman, (613) 595-4580investor.relations@nordion.comMEDIA:Tamra Benjamin, (613) 592-3400 x 1022tamra.benjamin@nordion.com