International Isotopes Announces 2013 Year End Financial Results
Published: Mar 31, 2014
IDAHO FALLS, Idaho, March 31, 2014 /PRNewswire/ -- International Isotopes Inc. (OTC Bulletin Board: INIS) (the "Company") announces the financial results for fiscal year ended December 31, 2013. The Company reports a 10% decrease in revenue, however, most business segments continue to show major improvement in net profit performance for the year.
Total revenue in 2013 was approximately $6.8 million compared to approximately $7.6 million in 2012, which represents a decrease of approximately 10%. With the exception of the cobalt products segment, however, our three other major business segments all reported a significant increase in net profit percentage over 2012 despite the decline in total revenue. These major business segments include Radiochemical Products, Nuclear Medicine Standards, and Radiological Services.
Sales of Radiochemical Products accounted for approximately 24% and 22% of our total sales revenue in 2013 and 2012 respectively. Revenue in this segment was approximately $1.6 million in 2013 compared to approximately $1.7 million in 2012, a decrease of approximately 2%. Radiochemical Product sales through the first three quarters of the year had been trending slightly better than the prior year. However, during the fourth quarter our main isotope supplier experienced difficulties that caused temporary curtailment in its production and forced us to identify and obtain materials from an alternate supplier. While we were able to resume a normal level of production and sales before year-end, the interruption caused a significant decrease in revenue for the fourth quarter of 2013 and ultimately resulted in an overall decrease in revenue within this segment for 2013 compared to 2012. The cost control measures and process efficiencies we implemented, however, resulted in our increasing the segment net profit performance by more than 136% compared to 2012 in spite of the reduction in revenue.
Sales of Nuclear Medicine Standards accounted for approximately 47% and 55%, of the Company's total sales revenue in 2013 and 2012, respectively. Sales in this segment decreased by approximately 22% in 2013, as compared to 2012. This year-to-year comparison includes sales from TI Services, LLC, a 50/50 joint venture the Company formed with RadQual, LLC in December 2010, to distribute products and services for nuclear medicine, nuclear cardiology, and Positron Emission Tomography (PET) imaging. TI Services, LLC sales for 2013 were approximately $1.5 million as compared to approximately $2.3 million for 2012, a decrease of approximately 37%. This decrease in TI Services, LLC sales is largely attributable to a drop in sales of paper products used in nuclear medicine imaging which is the result of clinics shifting towards maintaining electronic records. The Company is working closely with RadQual, LLC, to develop new products to market through TI Services, LLC and to make further cuts in operating expense. Without this loss of TI Services, LLC the loss in revenue to Nuclear Medicine Standards was just 3%. It is also worth noting that despite the decline in segment revenue the segment net profit percentage increased by approximately 5% compared to 2012.
Sales of Cobalt Products accounted for approximately 16% and 18%, of the Company's total sales revenue in 2013 and 2012, respectively. Sales of Cobalt Products decreased by approximately 21% in 2013 as compared to 2012. The decrease in revenue in this segment was attributable to a decrease in the production rate of high specific activity material caused by the continued curtailment of cobalt handling in the U.S. Department of Energy (DOE) Idaho test reactor. Throughout 2013, we worked with the DOE and the subcontractor to resolve these issues and during the fourth quarter of 2013 were able to resume shipments of cobalt targets to our facility. The decrease in availability along with the increase in cost of obtaining this material has negatively impacted our sales; however, we will continue to work towards a full resumption of cobalt target irradiation, the implementation of a new cobalt target design with the DOE, and to pursue alternate reactors for production of this important isotope.
Revenues from our Radiological Services segment accounted for approximately 11% and 2% of our total sales revenue in 2013 and 2012 respectively. The Radiological Services segment saw the largest percentage increase over any of our business segments in 2013. Sales in this segment increased to approximately $0.8 million in 2013 compared to approximately $0.2 million in 2012, an increase of over 330%. Gemstone processing accounted for approximately 40% of Radiological Services sales in 2013 and approximately 92% in 2012. Revenues from gemstone processing did increase in 2013, however, the most significant factor to this segments performance was the increase in revenue from field service activities. Radiological field services revenue increased from just a few thousand dollars in 2012 to nearly half a million dollars in 2013. This increase was the result of contractual field services work performed by us under the DOE's Orphan Source Recovery Program (OSRP). The increased revenue within the segment also led to a 377% increase in the segment's net profit percentage compared to 2012.
Cost of Revenue and Gross Profit
Our total cost of revenue for 2013 was approximately $4.3 million as compared to approximately $4.9 million in 2012, a decrease of approximately 13%. As a result our gross profit percentage increased to 37% for 2013, from 35% in 2012. During 2013, we took steps to recover increased freight and shipping costs by making sales price adjustments and by pursuing alternate shipping methods. We were also able to cut some freight costs by using our own transportation vehicles for some higher cost, cross-country shipments of material. We also made adjustments to sales prices and reduced distributor discounts to increase revenue. The cost of material used in manufacturing our products remained relatively stable during 2013, with the exception of the cost of cobalt material discussed earlier.
Operating Costs and Expenses
Total operating costs and expenses for 2013 were approximately $4.6 million compared to approximately $4.8 million in 2012, a decrease of approximately 5%. In April of 2013 we concluded our testing activities at our pilot facility in Idaho Falls, terminated our lease on that facility and sold or scrapped the majority of equipment related to the activities at that facility. The sales and scrapping of equipment resulted in an approximate loss of $307,000. We also reduced our research and development expense by approximately 29% compared to 2012, as the result of curtailing engineering activities on the planned de-conversion facility in New Mexico.
Our Net Loss was approximately $2.5 million in 2013, compared to a Net Loss of approximately $2.2 million in 2012. This is an increase in loss of approximately 10%. Most of the increase in net loss was attributable to our decision to scrap equipment and impair the value of some cobalt targets. For 2013, we recorded a total of approximately $500,000 in net loss on sales of assets sold or scrapped as a result of closing our FEP pilot facility in Idaho Falls and an inventory write-off expense related to older, low-activity cobalt targets with impaired market value. We do not anticipate a similar expense in 2014.
Steve Laflin, President and CEO of the Company said, "Fiscal year 2013 was a challenging year in terms of sales and production issues that continued to affect our ability to generate increased revenue. However, we have made significant progress during the past year addressing these issues and we believe we have set the stage for much improved revenue and performance in 2014.
For example, in our cobalt products segment, we were able to resume cobalt target shipments and processing in the fourth quarter of last year which should lead directly to increased sales this year. We were also able to purchase bulk cobalt material and increase recycling activities, both of which will result in increased sales of finished products. We also completed development of the new RadLite flood source with RadQual LLC and expect the availability of this new product to boost sales within the Nuclear Medicine Standards segment. And perhaps most significantly, our additional Nuclear Regulatory Commission licensed activities for field services and use of our new portable hot cell are expected to help us continue the rapid growth of revenue within the Radiological Services segment.
We are not aware of any near future price increases that could potentially affect our cost of revenues and we will continue to implement cost cutting and process improvement measures to further reduce the cost of revenue and operational expenses, which should contribute to much improved performance within our segments and for the overall improved financial performance for the company in 2014. As a part of our efforts to further improve the financial performance of the Company, and until such time that there are additional opportunities in the nuclear sector for depleted uranium de-conversion services, we will continue to delay further engineering work on the de-conversion project until we are able to secure additional contracts for de-conversion services."
International Isotopes Inc.
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About International Isotopes Inc.
International Isotopes Inc. manufactures a full range of nuclear medicine calibration and reference standards, a variety of cobalt-60 products, provides a wide selection of radioisotopes and radiochemicals for medical devices, calibration, clinical research, and industrial applications, and provides radiological services including source installation/removal, and decommissioning various radiation units on a contract basis to clients.
International Isotopes Inc. Safe Harbor Statement
Certain statements in this press release are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements with respect to our progress in addressing issues and improving sales performance within the cobalt products segment, the impact of any new product sales, the expected growth of revenue within the Radiological Services segment, our ability to control the cost of revenues, the success of cost cutting and process improvement measures, our expected improvement in net profit performance within our segments and overall improved financial performance for the company in 2014, and our ability to secure additional contracts for de-conversion services. Information contained in such forward-looking statements is based on current expectations and is subject to change. These statements involve a number of risks, uncertainties and other factors that could cause actual results, performance or achievements of International Isotopes Inc. to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Other factors, which could materially affect such forward-looking statements, can be found in International Isotopes Inc.'s filings with the Securities and Exchange Commission at www.sec.gov, including our Annual Report on Form 10-K for the year ended December 31, 2013. Investors, potential investors, and other readers, are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are only made as of the date of this press release and International Isotopes, Inc. undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
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