Nordion Reports Second Quarter 2011 Financial Results
Continued progress in value-creating business initiatives
-- Strong second quarter year-over-year TheraSphereÃ‚® revenue growth of 47% -- Second quarter Sterilization Technologies revenue boosted by shipment of production irradiator -- Received U.S. FDA approval to proceed with TheraSphereÃ‚® Phase III trials for primary and metastatic liver cancer
Nordion reports in U.S. dollars unless otherwise specified
OTTAWA, June 7, 2011 /PRNewswire/ – Nordion Inc. (TSX: NDN) (NYSE: NDZ), a
leading provider of products and services to the global health sciences
market, announced today second quarter 2011 revenues from continuing
operations of $68.3 million, up 32% from $51.8 million in the second
quarter 2010. Income from continuing operations was $6.8 million ($0.11
earnings per share), compared with a loss from continuing operations of
$49.0 million ($0.48 loss per share) in the second quarter 2010.
“Nordion made solid progress during the second quarter, advancing
value-creating initiatives, and increasing the diversification of
revenue across our product portfolio,” said Mr. Steve West, Chief
Executive Officer, Nordion Inc. “We’re very pleased with TheraSphere’s
growth and the reliable cash flow generation from our Sterilization
“On the Medical Isotopes front, we await the outcome of the planned
National Research Universal (NRU) reactor inspection and anticipate
being in a stronger competitive position following the restart,”
continued Mr. West.
Key Q2 2011 Events:
-- On March 10, 2011, Nordion announced the appointment of Janet Woodruff and Sean Murphy to its Board of Directors. -- On March 23, 2011, Nordion announced that the U.S. Food and Drug Administration approved the Company's application to proceed with Phase III TheraSphereÃ‚® trials for hepatocellular carcinoma and metastatic liver cancer. -- On March 28, 2011, Nordion shared results from the first multi-site, Phase II clinical trial to evaluate TheraSphereÃ‚® for treatment of metastatic liver cancer. Initial analysis of trial data led researchers to suggest that TheraSphereÃ‚® is a safe, well-tolerated treatment for patients with liver metastasis. -- On March 31, 2011, Nordion completed the divestiture of its Belgian operations, MDS Nordion S.A., excluding the TheraSphereÃ‚® business in Europe. -- On April 1, 2011, Nordion paid its initial quarterly cash dividend of $0.10 per share. -- As of April 30, 2011, Nordion had repurchased 2.8 million common shares at a cost of $32.7 million.
Subsequent to the quarter:
-- On May 15, 2011, a 33-day planned outage started at the NRU reactor -- On June 6, 2011, Nordion announced it had secured a three-year revolving, committed credit facility for $75 million
Second Quarter 2011 Results
As of the second quarter fiscal 2011the divested Belgian financial
results are reported under discontinued operations in current and
Consolidated Financial Results
Three months ended April 30 Six monthsended April 30 (thousands of U.S. dollars, except when noted) 2011 2010 2011 2010 Revenues $ 68,258 $ 51,764 $ 133,220 $ 92,457 Gross margin 52% 51% 53% 51% Operating income (loss) from continuing operations $ 8,406 $ (49,054) $ 41,142 $ (89,584) Loss from discontinued operations, net of income taxes $ (14,291) $ (40,794) $ (18,243) $ (143,086) Net (loss) income $ (7,478) $ (89,771) $ 14,067 $ (232,618) Basic earnings (loss) per share from continuing operations $ 0.11 $ (0.48) $ 0.49 $ (0.80) Cash and cash equivalents $ 63,892 $ 133,577 $ 63,892 $ 133,577 Share buyback (thousands of shares) 2,522 52,941 2,838 52,941 Weighted average number of Common shares outstanding - basic (thousands of shares) 64,552 102,505 65,843 111,321
-- Consolidated revenue from continuing operations in the second quarter 2011 were $68.3 million, up $16.5 million or 32%, compared with the second quarter 2010. The increase was primarily due to increased revenues from reactor isotopes in the Medical Isotopes segment as a result of the NRU reactor resuming operations in August 2010, and higher Targeted Therapies revenues primarily due to increased shipments of TheraSphereÃ‚®. Sterilization Technologies partially offset the increase with lower cobalt-60 (Co-60) revenue due to timing of usual fluctuations in the shipments of Co-60 to customers. -- Gross margin was 52%, compared with 51% in the second quarter of the previous fiscal year due to the NRU reactor resuming operations. -- Operating income from continuing operations in the second quarter 2011 was $8.4 million, up from a loss of $49.1 million in the second quarter 2010. Improved segment earnings from Medical Isotopes and Targeted Therapies and lower corporate selling, general and administrative expense contributed to the increase in operating income.
Segment Financial Results (with reconciliation to Net (loss) income)
Three months ended April30 Six months ended April30 (thousands of U.S. dollars, except per share amounts) 2011 2010 2011 2010 Revenues Medical Isotopes $ 27,574 $ 10,167 $ 56,981 $ 17,936 Targeted Therapies 15,359 13,605 32,164 27,214 Sterilization Technologies 25,325 27,992 44,075 47,307 Consolidated segment revenues from continuing operations $ 68,258 $ 51,764 $ 133,220 $ 92,457 Segment earnings (loss) Medical Isotopes $ 9,738 $ (96) $ 22,148 $ (1,347) Targeted Therapies 3,550 1,870 8,322 5,632 Sterilization Technologies 9,685 13,396 16,349 21,398 Corporate and Other (7,797) (37,314) (8,991) (49,602) Total segment earnings (loss) $ 15,176 $ (22,144) $ 37,828 $ (23,919) Depreciation and amortization 5,346 8,231 10,579 14,646 Gain on sale of investment (1,691) - (1,691) - Restructuring charges, net 843 17,766 535 51,443 AECL arbitration and legal costs 2,973 1,122 6,579 1,509 Impairment of long-lived assets - 1,371 - 1,371 Change in fair value of embedded derivatives (701) (1,580) (19,316) (3,304) Consolidated operating income (loss) from continuing operations $ 8,406 $ (49,054) $ 41,142 $ (89,584) Net interest income 2,245 1,119 3,722 1,644 Equity loss - (523) (128) (598) Income tax expense (3,838) (519) (12,426) (994) Loss from discontinued operations net of income taxes (14,291) (40,794) (18,243) (143,086) Net (loss) income $ (7,478) $ (89,771) $ 14,067 $ (232,618)
Medical Isotopes revenue of $27.6 million in the second quarter 2011
increased by $17.4 million or 171% compared to the second quarter 2010.
Reactor isotopes revenue was $21.9 million and cyclotron isotopes
revenue was $5.7 million this quarter, compared to $3.6 million and
$6.6 million, respectively, in the same period of the prior year.
The year-over year increase in reactor isotopes revenue was primarily
due to the NRU reactor resuming operations in August 2010 after a
15-month shutdown. Cyclotron isotopes revenue decreased in the second
quarter 2011 compared to same period in 2010 as thallium-201, used as a
substitute for Mo-99, declined due to the availability of Mo-99
following the restart of the NRU reactor.
Targeted Therapies revenue of $15.4 million in the second quarter 2011
increased by $1.8 million or 13% compared to the second quarter 2010.
The increase was driven by continued strong performance of
TheraSphereÃ‚®. TheraSphereÃ‚® revenue was $11.2 million in the second
quarter 2011, up $3.6 million or 47% compared to the second quarter
Nordion’s manufacturing activities for CardioGen-82 contributed nominal
revenue in the second quarter 2011 due to a manufacturing interruption
that started early this quarter.
Sterilization Technologies revenue of $25.3 million in the second
quarter 2011 decreased by $2.7 million or 10% compared to the second
quarter 2010. Revenue from cobalt sales were $19.6 million in the
second quarter, down $8.0 million or 29% compared to the second quarter
2010. The decrease in segment revenue was partially offset by a
shipment of a production irradiator.
Corporate and Other
Corporate and Other recorded a loss of $7.8 million in the second
quarter 2011, down $29.5 million or 79% compared to the second quarter
2010 as Nordion has substantially completed its strategic repositioning
activities. Corporate selling, general and administrative expenses were
$3.1 million. Other expenses, net of $4.2 million were recorded during
the quarter, including a foreign exchange loss of $4.5 million.
Nordion recorded a loss from discontinued operations, net of income
taxes of $14.3 million in the second quarter 2011, down $26.5 million
or 65% compared to the second quarter 2010. The loss from discontinued
operations in the second quarter 2011 resulted from the sale of MDS
Nordion S.A., Nordion’s Belgium operations, and certain tax adjustments
and settlements relating to the discontinued operations of MDS Pharma
Services and MDS Analytical Technologies.
Outlook Summary (for a more detailed Outlook please refer to Nordion’s
second quarter fiscal 2011 Management Discussion &Analysis)
Due to the planned NRU reactor maintenance and inspection shutdown,
expected by the Atomic Energy Canada Limited to be 33 days in duration
starting from May 15, 2011, Nordion expects Q3 2011 reactor isotopes
revenue to be significantly below Q2 2011 reactor isotopes revenue. If
the NRU reactor restarts as planned on June 17, 2011, Nordion expects
Mo-99 supply to be available for customers beginning the week of June
Nordion continues to work with existing customers and potential new
customers to secure additional sales of medical isotopes and increase
global market share of Mo-99.
Moly-99 from Russia’s Isotope
In addition to not receiving back-up supply from Isotope during the
current NRU shutdown, Nordion has reduced its overall forecast of Mo-99
supply quantities that the Company expects to receive from Isotope
during the life of the current contract. Initial quantities supplied
are expected to be at lower levels than previously forecasted, and the
ramp up to full production levels is anticipated to take longer than
expected. In addition, Nordion expects Isotope to reach its full
currently planned production capacity prior to 2016. While the current
estimate of supply levels from Isotope is lower than previously
estimated, Nordion continues to believe that Isotope can be a
significant component of the Company’s supply chain in the future.
For the full year of 2011, Nordion expects TheraSphereÃ‚® to grow at or
above the 40% growth rate experienced in 2010.
The ongoing issue with a third party supplied component for
CardioGen-82(TM) is expected to continue to impact financial results in
the third quarter 2011 and possibly into the fourth quarter. Nordion
expects to partially mitigate the financial impact of this issue
through the sale of bulk Strontium-82 (Sr-82), the isotope used in the
manufacturing of CardioGen-82(TM) generators. Sr-82 revenue is recorded
under cyclotron isotopes revenue in the Medical Isotopes segment.
Nordion expects Co-60 shipments in the third and fourth quarters 2011 to
be higher than the second quarter 2011. The Company continues to expect
Co-60 volume for full fiscal 2011 to be approximately equal with fiscal
Subsequent to the second quarter 2011, Nordion established a $75
million, three-year credit facility. Nordion plans to use the credit
facility to reissue existing letters of credit, which would in turn
release approximately $20 million in restricted cash, to issue future
letters of credit, and to provide an additional source of liquidity.
A full copy of Nordion’s second quarter 2011 Management’s Discussion and
Analysis and the financial statements and notes (unaudited) can be
downloaded at www.nordion.com/investors/financial_results.asp.
Nordion will hold a conference call on Wednesday, June 8, 2011 at 9:30
am ET to discuss its second quarter 2011 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 1-800-952-6845 (toll-free North America)
or 1-416-695-7848 (International).
About Nordion Inc.
Nordion Inc. (TSX: NDN) (NYSE: NDZ) is a global specialty 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, 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 500 highly
skilled employees in three 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
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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
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our ability to negotiate future credit agreements, which may or may not
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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
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personnel; our ability to have continued and uninterrupted performance
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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.