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Nordion Reports Fourth Quarter and Fiscal 2010 Financial Results

January 20, 2011

Improved performance across all business segments

Highlights:

  • Resumed position as a key supplier in the molybdenum-99 (Mo-99) supply
    chain with the restart of the National Research Universal (NRU) reactor
  • Established long-term supplemental supply of Mo-99 with Russian
    supplier, Isotope
  • Ended fiscal 2010 in a solid liquidity position and with financial
    flexibility, announcing dividend and Normal Course Issuer Bid (NCIB)
    program in January 2011
  • Initiated reporting on three segments:  Medical Isotopes, Targeted
    Therapies, and Sterilization Technologies

Nordion reports in U.S. dollars unless otherwise specified

OTTAWA, Jan. 20 /PRNewswire-FirstCall/ – Nordion Inc. (TSX: NDN; NYSE: NDZ), a leading
provider of products and services to the global health science market,
today reported its fourth quarter and fiscal 2010 financial results.
The Company also filed its 2010 Annual Report, which includes audited
consolidated financial statements and notes for the year ended October
31, 2010
, and related management’s discussion and analysis, the 2010
Annual Information Form, and the 2011 Management Proxy Circular.

Revenues from continuing operations of $85.8 million were up $34.4
million
or 67% in the fourth quarter of fiscal 2010, compared with
$51.4 million in the fourth quarter of fiscal 2009. Income from
continuing operations was $9.3 million ($0.14 earnings per share),
compared with a loss of $18.2 million ($0.14 loss per share) in the
fourth quarter of fiscal 2009.

In fiscal 2010, revenues from continuing operations were $240.4 million,
up 4% compared with fiscal 2009.  The loss from continuing operations
was $103.3 million ($1.16 loss per share), a significant increase from
a loss of $11.7 million ($0.10 loss per share) in fiscal 2009.

“Nordion’s financial results strengthened in the fourth quarter across
all three business segments,” said Mr. Steve West, Chief Executive
Officer, Nordion Inc. “Increased sales in the Sterilization
Technologies business, a resumption of activity in the Mo-99 supply
chain, and improved performance of key Targeted Therapies products
contributed to stronger revenues.”

“Now that Nordion has completed the strategic repositioning, we’re
focused on driving improved profitability and cultivating sustainable
growth,” added Mr. West.

Key Q4 Events:

  • Nordion extended its existing agreement with Ontario Power Generation,
    Inc., securing supply of cobalt-60 (Co-60) for the Company until 2020.
  • The NRU reactor, Nordion’s primary source of Mo-99 supply, returned to
    operation and Nordion resumed its role in the medical isotope supply
    chain.
  • Nordion announced that Kenneth Newport was appointed to the Board of
    Directors.
  • Nordion entered into a framework agreement with Russian Rosatom State
    Corporation’s subsidiary, Open Joint Stock Company Isotope (Isotope),
    and signed an agreement for the exclusive supply of Mo-99 for
    processing, distribution and sale outside the Russian Federation until
    2020.

Subsequent to the quarter:

  • On November 1, 2010, the Company completed its name change from MDS Inc.
    to Nordion Inc.
  • On December 2, 2010, Nordion announced it had signed a non-binding
    letter of intent to divest its Belgian subsidiary, MDS Nordion S.A.
  • On December 23, 2010, Nordion announced that the first sample of Mo-99
    had been shipped from Isotope.
  • On January 5, 2011, Nordion announced it had extended its Mo-99 supply
    contract with a major customer, Lantheus Medical Imaging, Inc., until
    December 31, 2013.
  • On January 20, 2011, Nordion announced the introduction of an annual
    dividend of $0.40 per share, to be payable on a quarterly basis, and an
    NCIB program.

“Nordion demonstrated resilience throughout 2010,” said Peter Dans,
Chief Financial Officer. “By focusing on operational and financial
performance, the Company exited the year with the financial flexibility
that allows us to return cash to shareholders through our announced
dividend and NCIB.”

Medical Isotope Update

The restart of the NRU reactor was a major event for Nordion in the
fourth quarter of fiscal 2010. It supported the Company’s return as a
key player in the Mo-99 supply chain and as an important partner to its
customers.

The current medical isotope landscape is significantly different when
compared with the landscape Nordion operated in prior to the NRU
reactor shutdown in May 2009. These changes created uncertainty in the
medical isotope market, in general, and has specifically impacted
Nordion. Several factors, as discussed in the 2010 Management
Discussion and Analysis (MD&A) filed today, have affected key drivers
of the Company’s profitability of its Medical Isotopes segment,
including pricing and demand for medical isotopes, and in particular,
for Mo-99. As a result, based on activity since the NRU reactor
restarted in late-August 2010, the Company currently expects revenue
and segment earnings contribution for the first and second quarter of
fiscal 2011 to be similar to our results for medical isotopes in the
fourth quarter of fiscal 2010. This indicates that lower demand and
reduced market share are expected to offset price increases compared
with what it was prior to the May 2009 shutdown. Nordion continues to
work with existing customers and is in discussions with potential new
customers to increase its global market share of Mo-99.

The Company continues to expect to receive its first commercial shipment
of supplemental Mo-99 product from its Russian partner, Isotope, in the
first half of fiscal 2011. Supply is anticipated to be available to
partially offset the impact of an approximately one-month long shutdown
of the NRU reactor scheduled by Atomic Energy of Canada Limited (AECL)
in mid-May of 2011. Nordion will not receive product from the NRU
reactor for the majority of the shutdown period. While the anticipated
Mo-99 supply from Isotope during the planned shutdown of the NRU
reactor is expected to be substantially less than the Company currently
receives from the NRU reactor, the agreement with Isotope establishes
Nordion as a reliable supplier of Mo-99 over the mid- to long-term and
strengthens its relationships with customers. Over several years, the
expectation is to have supply available of up to 20% of global Mo-99
demand to back up long-term requirements.

MAPLE Arbitration Update

Hearings for the arbitration with AECL related to the MAPLE Facilities
are proceeding, and the Company currently expects them to conclude in
the fall of 2011, with a decision from the panel following the
conclusion of the hearings.

Fourth Quarter and F2010 Results

    Three months ended

October  31

  Twelve months ended

October 31

    2010   2009   2010   2009
Consolidated Results

(thousands of U.S. dollars, except where noted)

               
Consolidated Revenues from continuing operations $ 85,841   51,411 $ 240,352   231,263
Gross margin   53%   46%   47%   49%
Operating income (loss) from continuing operations $ 15,394   (11,985)   (106,405)   (1,616)
Income (loss) from continuing operations $ 9,280 $ (18,228) $ (103,348) $ (11,650)
  • Basic earnings (loss) per share from continuing operations
$ 0.14 $ (0.14) $ (1.16) $ (0.10)
Net income (loss) $ 15,672 $ (58,658) $ (232,010) $ (135,241)
Cash and cash equivalents $ 122,802 $ 298,203 $ 122,802 $ 298,203
Share buyback                
  • thousands of shares
  -   -   52,941   -
Weighted average number of Common

shares outstanding – basic (thousands of

shares)

  67,237   120,137   89,279   120,137

Continuing Operations by Segment

  • Consolidated revenues from continuing operations in the fourth quarter
    of fiscal 2010 were $85.8 million, up $34.4 million or 67%, compared
    with the fourth quarter of fiscal 2009. The increase was primarily due
    to higher revenues from Medical Isotopes as a result of the NRU reactor
    resuming operations in August 2010, higher Targeted Therapies revenues
    primarily due to increased shipments of TheraSphere(R) and CardioGen-82(TM) products, and higher Sterilization Technologies revenues as a result of
    increased shipments of Co-60 and the sale of a production irradiator.
    Gross margin was 53%, compared with 46% in the fourth quarter of the
    previous fiscal year.
  • Income from continuing operations in the fourth quarter of fiscal 2010
    was $9.3 million, up $27.5 million, compared with the fourth quarter of
    fiscal 2009.  Other than a favourable $13 million change in the fair
    value of embedded derivatives primarily associated with the Company’s
    Russian Mo-99 supply agreement, the increase was primarily due to
    improved segment earnings from Medical Isotopes and Sterilization
    Technologies. Additionally, the Company incurred lower restructuring
    costs in the fourth quarter of fiscal 2010 compared with in the same
    quarter in fiscal 2009.
  • Other items impacting income from continuing operations in the fourth
    quarter of fiscal 2010 also included:
    • Selling, general and administrative (SG&A) expenses of $29.3 million, up
      $8.4 million compared with the same period of fiscal 2009 primarily due
      to a $2.8 million increase in cost associated with the MAPLE
      arbitration, higher costs associated with transition activities, higher
      incentive and stock-based compensation, and an unfavorable operational
      foreign exchange impact.
    • $2.5 million of restructuring costs primarily related to facilities,
      compared with $8.5 million of restructuring charges in the fourth
      quarter of fiscal 2009.
    • Other expenses, net of $4.0 million, up $5.4 million compared with an
      income of $1.4 million the same period of fiscal 2009.
  • Cash and cash equivalents of $122.8 million as of October 31, 2010, was
    $175.4 million lower compared with $298.2 million as of October 31,
    2009
    , but up $1.5 million from the end of the third quarter of 2010.
    Factors impacting year over year cash balances are described in the
    liquidity section of the Company’s 2010 MD&A filed today, and include
    the effects of divestures, share buybacks, debt settlement, and
    operational needs. In the fourth quarter of 2010, payments for
    restructuring costs and income taxes remittances were funded primarily
    from positive operational cash flow and the sale of an Asset-backed
    commercial paper investment.

Medical Isotopes

    Three months ended

October  31

  Twelve months ended

October 31

    2010   2009   2010   2009
Consolidated Results

(thousands of U.S. dollars, except where noted)

               
Revenues $ 27,907   7,835   57,958   94,412
Segment earnings (loss)   7,987   (2,055)   4,146   31,813
Gross margin   49%   15%   37%   49%

Medical Isotopes revenues increased $20.1 million or 256% in the fourth
quarter of fiscal 2010 compared with the same quarter in fiscal 2009
primarily due to the restart of the NRU reactor, which occurred in
late-August. The impact of the NRU reactor-based isotopes was partially
offset by a 7% decline in cyclotron isotopes as they returned to normal
levels. 

Revenues of $58.0 million for the entire fiscal 2010 decreased by $36.4
million
or 39% compared with fiscal 2009 primarily due to the outage of
the NRU reactor, resulting in a 55% decrease in reactor-based isotope
revenues. The decrease in reactor-supplied revenues was partially
offset by cyclotron product revenues, which were 22% higher in fiscal
2010 compared with fiscal 2009, mainly driven by demand for
Thallium-201, which was used as a substitute for Mo-99 due to shortages
resulting from the NRU reactor shutdown and disruption to supply from
the High Flux Reactor in the Netherlands in fiscal 2010.

Targeted Therapies

    Three months ended

October  31

  Twelve months ended

October 31

    2010   2009   2010   2009
Consolidated Results

(thousands of U.S. dollars, except where noted)

               
Revenues $ 19,851   14,660   65,552   42,261
Segment earnings (loss)   1,980   2,229   6,582   261
Gross margin   48%   42%   41%   38%

Targeted Therapies revenues increased $5.2 million or 35% in the fourth
quarter of fiscal 2010 compared with the same quarter in fiscal 2009
reflecting strong performance by TheraSphere(R) and CardioGen-82(TM)
products. Segment earnings decreased $0.3 million or 11% as increased
research and development spending on TheraSphere(R) and the
decommissioning of a production facility in Fleurus, Belgium offset the
contribution from stronger product sales.

Revenues of $65.6 million in fiscal 2010 increased by $23.3 million or
55% compared with fiscal 2009. The increase was due to the continued
strong performance of a number of products, primarily CardioGen-82(TM)
along with the global performance of TheraSphere(R) which grew by 40% in
2010.

Sterilization Technologies

    Three months ended

October  31

  Twelve months ended

October 31

    2010   2009   2010   2009
Consolidated Results

(thousands of U.S. dollars, except where noted)

               
Revenues $ 38,083   28,916   116,842   94,590
Segment earnings (loss)   17,706   13,203   46,861   35,085
Gross margin   60%   57%   54%   53%

Sterilization Technologies revenues increased $9.2 million or 32% in the
fourth quarter of fiscal 2010 compared with the same quarter in fiscal
2009 as a result of increased shipments of Co-60 and the sale of one
production irradiator. As a result of higher revenue, segment earnings
increased by $4.5 million or 34%.

Revenues of $116.8 million in fiscal 2010 increased $22.2 million or 24%
compared with fiscal 2009. The increase was primarily due to increased
volume and pricing of Co-60 and the shipment of two production
irradiators in fiscal 2010, compared with one in fiscal 2009.

Corporate and Other

Corporate and Other recorded a loss of $9.5 million in the fourth
quarter of fiscal 2010, up $1.7 million or 22% compared with a loss of
$7.8 million in the fourth quarter of fiscal 2009. The increase in the
operating loss was primarily due to higher costs associated with
transition activities, higher annual incentive costs, mark-to-market
valuation of deferred share units, and unfavourable operational foreign
exchange impact. 

A segment loss of $66.1 million for Corporate and Other was recorded in
fiscal 2010, up $25.2 million or 62% compared with fiscal 2009. The
increase in the operating loss was mainly due to higher SG&A costs
associated with transition and strategic repositioning activities, and
a non-cash foreign exchange loss of approximately $27 million primarily
resulting from the revaluation of $450.0 million of proceeds from the
sale of MDS Analytical Technologies that were held in a Canadian dollar
functional currency entity in U.S. dollars to fund the substantial
issuer bid.

Discontinued Operations

Nordion recorded an operating loss of $3.2 million in the fourth quarter
of fiscal 2010, compared with an operating loss of $7.3 million in the
fourth quarter of fiscal 2009. The decrease was primarily due to
completion of the strategic repositioning in fiscal 2010.

An operating loss of $62.0 million was recorded in fiscal 2010, compared
with a loss of $91.3 million in fiscal 2009. The operating loss in
fiscal 2010 was primarily a result of the MDS Pharma Services Early
Stage business whereas the operating loss in fiscal 2009 included the
operating performance of MDS Pharma Services Early Stage and Late Stage
businesses, as well as MDS Analytical Technologies.

Conference Call

Nordion will hold a conference call on Friday, January 21, 2011 at 9:30
am ET
to discuss its fourth quarter and fiscal 2010 results. This call
will be webcast live at www.nordion.com, and will be available after the call in archived format at www.nordion.com/investors/webcasts_and_presentations.asp. To participate, please dial 1-866-223-7781 (toll-free North America)
or 1-416-340-8018 (International).

Nordion’s 2010 Annual Report and Annual Information Form, and the 2011
Management Proxy Circular can be accessed on the Company’s website at www.nordion.com/investors/annual_reports.asp.

About Nordion Inc. 

Nordion Inc. (TSX: NDN; NYSE: NDZ) is a global specialty health science
company that provides market-leading products and services used for the
prevention, diagnosis and treatment of disease. We are a leading
provider of medical isotopes, targeted therapies and sterilization
technologies 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 more than 600 highly skilled employees in four locations. Find out
more at www.nordion.com.

Caution Concerning Forward-Looking Statements

From time to time, we make written or oral 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. This document contains forward-looking statements including the
strategy of the continuing businesses, as well as statements with
respect to our beliefs, plans, objectives, expectations, anticipations,
estimates and intentions. The words “may”, “could”, “should”, “would”,
“outlook”, “believe”, “plan”, “anticipate”, “estimate”, “project”,
“expect”, “intend”, “indicate”, “forecast”, “objective”, “optimistic”,
and words and expressions of similar import, are intended to identify
forward-looking statements.

By their very nature, forward-looking statements involve inherent risks
and uncertainties, both general and specific, which give rise to the
possibility that predictions, forecasts, projections and other
forward-looking statements will not be achieved. We caution readers not
to place undue reliance on these statements as a number of important
factors could cause our actual results to differ materially from the
beliefs, plans, objectives, expectations, anticipations, estimates and
intentions expressed in such forward-looking statements. These factors
include, but are not limited to: management of operational risks; our
ability to secure a reliable supply of raw materials, particularly
cobalt and critical medical isotopes; the effects of competition in the
markets in which we operate; our ability to manage long-term supply
commitments; our reliance on one customer for the majority of our sales
of medical isotopes; our ability to maintain regulatory approval for
the manufacturing, distribution and sale of our products; the strength
of the global economy, in particular the economies of Canada, the U.S.,
the European Union, Asia, and the other countries in which we conduct
business; the stability of global equity markets; assets and
liabilities that we retained from the businesses sold; obligations
retained and projected adjustments thereto; successful implementation
of structural changes, including restructuring plans; our ability to
complete other strategic transactions and to execute them successfully;
our ability to negotiate future credit agreements, which may or may not
be on terms favorable to us; the impact of the movement of the U.S.
dollar relative to other currencies, particularly the Canadian dollar
and the euro; changes in interest rates in Canada, the U.S., and
elsewhere; the timing and technological advancement of new products
introduced by us or by our competitors; our ability to manage our
research and development; the impact of changes in laws, trade policies
and regulations including health care reform, and enforcement thereof;
regulatory actions; judicial judgments and legal proceedings, including
legal proceedings described in this document; our ability to maintain
adequate insurance; our ability to successfully realign our
organization, resources and processes; our ability to retain key
personnel; our ability to have continued and uninterrupted performance
of our information technology and financial systems; our ability to
compete effectively; the risk of environmental liabilities; new
accounting standards that impact the policies we use to report our
financial condition and results of operations; uncertainties associated
with critical accounting assumptions and estimates; the possible impact
on our businesses from third-party special interest groups; our ability
to negotiate and maintain collective-bargaining agreements for certain
of our employees; natural disasters; public health emergencies and
pandemics; international conflicts and other developments including
those relating to terrorism; other risk factors described in section 5
of our AIF; and our success in anticipating and managing these risks.

The foregoing list of factors that may affect future results is not
exhaustive. When relying on our forward-looking statements to make
decisions with respect to the Company, investors and others should
carefully consider the foregoing factors and other uncertainties and
potential events. We do not undertake to update any forward-looking
statement, whether written or oral, that may be made from time to time
by us or on our behalf, except as required by law.

SOURCE Nordion Inc.


Source: newswire



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