TORONTO, Dec. 19, 2011 /PRNewswire/ - Patheon Inc. (TSX: PTI), a leading
provider of contract development and manufacturing services to the
global pharmaceutical industry, announced today full year and fourth
quarter results. For the full year:
Revenues were $700.0 million versus $671.2 million in the same period
last year. Excluding currency fluctuations, revenues would have been
approximately 3.0 percent higher than in the same period last year.
Operating income was $10.9 million compared to $27.6 million in the same
period last year.
The loss before discontinued operations was $16.2 million compared to a
loss before discontinued operations of $3.3 million in the same period
Adjusted EBITDA was $73.0 million compared to $91.7 million in the same
period last year.
For the fourth quarter:
Revenues were $181.6 million versus $177.7 million in the same period
last year. Excluding currency fluctuations, revenues would have been
approximately 1.1 percent higher than in the same period last year.
Operating loss was $3.7 million compared to operating income of $13.3
million in the same period last year.
The loss before discontinued operations was $5.3 million compared to a
loss before discontinued operations of $0.9 million in the same period
Adjusted EBITDA was $17.3 million compared to $28.6 million in the same
period last year.
In commenting on the financial results, James C. Mullen, Patheon's Chief
Executive Officer said, "Our pipeline of business is up and key
internal performance metrics are improving. Underlying performance in
the fourth quarter was impacted by the non-recurrence in 2011 of $11.2
million of deferred revenue at our U. K. facility in 2010. SG&A costs,
which have increased due to consulting expenses associated with our
transformation efforts, should become less of a factor in the fourth
quarter of fiscal 2012."
He added, "As we move forward in fiscal 2012 we are successfully
executing on our transformation. In the locations where we have rolled
out our operational excellence programs, we have already realized
enhanced capacity, decreased cycle times and improved efficiency. We
will continue to focus on what matters most to our customers; quality,
on time delivery and right first time results. Our European site
rollout should begin in January and I would expect the same results."
Full Year Fiscal 2011 Operating Results from Continuing Operations
Gross profit for fiscal 2011 decreased to $138.1 million from $145.0
million in the 2010 fiscal year. The decrease in gross profit was due
to a reduction in gross profit margin to 19.7 percent for fiscal 2011
from 21.6 percent for fiscal 2010, partially offset by higher
revenues. The decrease in gross profit margin was due to unfavorable
foreign exchange impact on cost of goods sold related to the weakening
of the U.S. dollar, higher labor costs, increase in supplies and
maintenance, higher inventory write-offs, and the impact of the prior
year's research and development investment tax credits taken in fiscal
2010. These were partially offset by favorable mix resulting from the
reservation fee and higher deferred revenue amortization related to the
amended manufacturing and supply agreement in the U.K.
Selling, general and administrative expenses in fiscal 2011 increased to
$120.2 million from $110.6 million for fiscal 2010. The increase was
primarily due to higher consulting and professional fees of $12.8
million, higher costs related to the former CEO's severance of $1.1
million, higher stock based compensation of $1.4 million, partially
offset by elimination of costs associated with the special committee of
independent directors (the "Special Committee") of $3.0 million for
fiscal 2010, and lower depreciation of $3.0 million. The impact of
unfavorable foreign exchange rates on SG&A expense was approximately
$3.4 million versus prior year.
Operating income for fiscal 2011 decreased $16.7 million to $10.9
million (1.6 percent of revenues), from $27.6 million (4.1 percent of
revenues) for fiscal 2010 as a result of the factors discussed above.
As of October 31, 2011, the company was holding cash and cash
equivalents of $33.4 and had undrawn lines of credit available to it
of $94.9 million.
Fiscal 2011 Highlights of Business Segment Results
Commercial Manufacturing - Revenues for fiscal 2011 were $572.6 million up from $545.3 million for
fiscal 2010. Had local currency exchange rates remained constant with
the rates of fiscal 2010, CMO revenues for fiscal 2011 would have been
approximately 3.6 percent higher than the prior fiscal year. The
increase was primarily due to higher revenues in the United Kingdom
from the reservation fee and accelerated deferred revenue related to
the amended manufacturing supply agreement and stronger performance in
Adjusted EBITDA for fiscal 2011 was $80.0 million up from $72.3 million
for fiscal 2010. This represents an Adjusted EBITDA margin of 14.0
percent for fiscal 2011 compared to 13.3 percent for fiscal 2010. Had
local currencies remained constant to prior year rates, and after
eliminating the impact of all foreign exchange gains and losses,
Adjusted EBITDA for fiscal 2011 would have been approximately $2.3
million higher. The increase in Adjusted EBITDA was driven by the
higher revenues, partially offset by $5.0 million in consulting fees
related to the strategic initiatives, prior year's recognition of
accelerated deferred revenue of $4.2 million in Cincinnati, and weaker
performance across Europe excluding the U.K.
Pharmaceutical Development Services ("PDS") - Revenues for fiscal 2011 were $127.4 million up from $125.9 million
for fiscal 2010. Had the local currency rates remained constant to
fiscal 2010, PDS revenues for fiscal 2011 would have increased
approximately 0.2 percent from fiscal 2010.
Adjusted EBITDA for fiscal 2011 was $29.9 million down from $46.8
million for fiscal 2010. Had local currencies remained constant to the
rates of the prior year and after eliminating the impact of all foreign
exchange gains and losses, PDS Adjusted EBITDA for fiscal 2011 would
have been approximately $2.2 million higher than reported. PDS Adjusted
EBITDA for fiscal 2011 included $5.8 million of research and
development investment tax credits compared to $10.8 million in fiscal
2010. In addition, lower than expected sales at certain sites resulting
from project cancellations related to customer regulatory approvals,
clinical trial outcome issues, and industry consolidation contributed
to the reduction in Adjusted EBITDA.
Corporate - Corporate costs for fiscal 2011 were $36.9 million up from $27.4
million for fiscal 2010. The increase was primarily due to unfavorable
foreign exchange of $3.4 million, $4.4 million of higher advisor fees
due to registration with the SEC and corporate strategy initiatives,
expenses related to the change in our CEO of $3.3 million and higher
compensation expenses. These were partially offset by the
non-recurrence of $3.0 million in Special Committee costs incurred in
Fourth Quarter Operating Results from Continuing Operations
Revenues for the fourth quarter 2011 were $181.6 million up from $177.7
million for the same period last year. Excluding currency fluctuations,
revenues would have been approximately 1.1 percent higher than the same
period of the prior year.
Gross profit was $35.7 million down from $42.8 million in the same
period last year. The decrease in gross profit was primarily due to a
reduction in gross profit margin to 19.7 percent for the fourth quarter
from 24.1 percent for the same period in 2010, partially offset by
higher volumes. The decrease in gross profit margin was primarily due
to unfavorable mix resulting from the reduction of take or pay and
deferred revenue recognition in the United Kingdom and the unfavorable
foreign exchange impact related to the weakening of the U.S. dollar,
partially offset by lower depreciation primarily from winding down of
the accelerated depreciation in Puerto Rico.
Selling, general and administrative expenses in the quarter were $35.9
million up from $28.5 million for the same period last year. The
increase was primarily due to higher consulting fees for strategy and
operational initiatives. The unfavorable foreign exchange impact on
selling, general and administrative expense included above was
approximately $0.8 million.
Repositioning expenses for the fourth quarter were $3.5 million up from
$1.0 million for same period last year. The increase was due to costs
associated with repositioning expenses in Zug and Swindon partially
offset by lower expenses in connection with the Caguas closure and
consolidation in Puerto Rico.
Operating loss in the fourth quarter was $3.7 million, or -2.0 percent
of revenues, from operating income of $13.3 million, or 7.5 percent of
revenues, for the same period last year as a result of the factors
Fiscal 2012 Outlook
The company believes that fiscal year 2012 revenues will be modestly
higher than fiscal year 2011.
In conjunction with its financial results announcement, Patheon will
host a conference call and Web cast with financial analysts on Monday,
December 19, 2011 at 10:00 a.m. (EST). The financial results news
release will be issued at approximately 7:30 a.m. (EST) on Monday,
December 19, 2011.
Interested parties are invited to access the conference call, via
telephone, toll free at 1-888-231-8191 (U.S., including Puerto Rico)
and 1-647-427-7450 (Canada and International). To view the slides
accompanying the conference call click here. The link to the Web cast will also be posted on the investor
relations section of Patheon's Web site prior to the call.
Participants are encouraged to dial in five to fifteen minutes in
advance to avoid delays. A live audio will also be available via the
web at http://www.patheon.com. (Please note that either Windows Media Player or RealPlayer are
A telephone replay of the conference call will be available between
Monday, December 19, 2011 and Monday, December 26, 2011 by dialing
1-855-859-2056(toll free) or 1-403-451-9481, and by entering identification number
28873561, followed by the number key. The conference call will also be
archived at http://www.patheon.com.
Patheon Inc. (TSX: PTI) is a leading global provider of contract
development and manufacturing services to the global pharmaceutical
industry. The company provides the highest quality products and
services to approximately 300 of the world's leading pharmaceutical and
biotechnology companies. Its services range from preclinical
development through commercial manufacturing of a full array of dosage
forms including parenteral, solid and liquid forms.
The company's comprehensive range of fully integrated Pharmaceutical
Development Services includes pre-formulation, formulation, analytical
development, clinical manufacturing, scale-up and commercialization.
The company's integrated development and manufacturing network of 10
manufacturing facilities, nine development centers and one clinical
trial material packaging facility across North America and Europe,
enables customer products to be launched with confidence anywhere in