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Nordion Third Quarter Fiscal 2012 Earnings Conference Call


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Nordion Third Quarter Fiscal 2012 Earnings Conference Call - Slide Presentation

Nordion Third Quarter Fiscal 2012 Earnings Conference Call - Slide Presentation

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  • 1. Third Quarter Fiscal 2012Earnings Conference Call Sept. 6, 2012
  • 2. Caution on Forward Looking StatementsThis presentation contains forward-looking statements, within the meaning of applicable securities laws, including underapplicable Canadian securities laws and the “safe harbor” provisions of the United States Private Securities Litigation Reform Actof 1995. These statements can be identified by expressions of belief, expectation or intention, as well as those statements that arenot 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 identifyforward-looking statements. Forward-looking statements are necessarily based on estimates and assumptions made by us in lightof our experience and our perception of historical trends, current conditions and expected future developments, as well as otherfactors 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 differmaterially from those projected in the forward-looking statements. Accordingly, this presentation is subject to the disclaimer andqualified by the assumptions, qualifications and risk factors referred to in our 2011 Annual Information Form (AIF). Factors thatcould cause actual results or events to differ materially from current expectations include, but are not limited to, fluctuations insupply and demand, pricing pressures and rising costs, changes in currency and exchange rates and potential adversedevelopments in new and pending legal proceedings or regulatory investigations, as well as the risk factors which are describedin section 5 of our 2011 AIF and in our other filings with the Canadian provincial securities commissions and the US Securitiesand Exchange Commission, and our success in anticipating and managing those risks. We caution readers not to place unduereliance on the Company’s forward-looking statements, as a number of factors could cause our actual results, performance orachievements to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates and intentionsexpressed 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 byapplicable law. 2
  • 3. Non GAAP InformationTo supplement the financial measures prepared in accordance with generally accepted accounting principles (GAAP), thecompany uses non-GAAP financial measures such as adjusted net income and adjusted earnings per share. Non-GAAP financialmeasures exclude certain items, such as restructuring charges and recovery, change in fair value of embedded derivatives, AECLarbitration and legal fees, loss and gains on sales of investments, loss or gains on discontinued operations, and tax effects onadjusted items. Management uses non-GAAP financial measures internally for strategic decision making, forecasting futureresults and evaluating current performance. By disclosing non-GAAP financial measures, management intends to provideinvestors with a meaningful, consistent comparison of the companys 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 necessarilycomparable to other companies and should be considered as a supplement to, not a substitute for, or superior to, thecorresponding measures calculated in accordance with GAAP. 3
  • 4. Third Quarter Fiscal 2012Earnings Conference Call Steve West Chief Executive Officer Sept. 6, 2012
  • 5. Q3 2012 Results Targeted Therapies Sterilization Technologies Medical Isotopes Segmented Revenue Segmented Earnings* (US$ millions) (US$ millions)80 2570 206050 32.1 32.1 14.4 15 15.340 1030 21.4 19.720 5.3 5 4.810 13.3 15.3 3.6 2.1 0 0 2011 2012 2011 2012 Q3 Q3 * Excludes corporate segmented loss 5
  • 6. Arbitration Timeline February 2006- May 16, 2008 - Nordion exchanged all of its ownership AECL and the Government of rights and obligations in the MAPLE Canada announced their intention Facilities for a new 40 year long term to discontinue the MAPLE project October 21, 2011 - September 10, 2012 - supply of isotopes to be produced in the without prior notice to or Ongoing arbitration with Nordion to announce now AECL-owned MAPLE Facilities. consultation with MDS AECL schedule extended. arbitration panel decision1998- July 2008 - May 25, 2012 -MDS entered into an agreement with AECL Nordion served AECL with a notice of Final arguments completed.for the design, development and arbitration proceedings seeking anconstruction of two new nuclear reactors order to compel AECL to fulfill itsand processing facility, known as the contractual obligations.MAPLE project. 6
  • 7. Internal Investigation• Discovered through the Company’s own internal review as part of Nordion’s compliance program• Voluntarily disclosed this issue to regulatory and enforcement authorities• Ceased payments to and terminated our contractual arrangements with the affected foreign supplier 7
  • 8. Targeted Therapies: TheraSphere®• 13% year-over-year • Growth of ~15% revenue growth compared to F2011 2012 OUTLOOK Q3 RESULTS• Drove new account • Continue to drive growth in key market education, markets training, sales• TheraSphere growth demonstrated • Continue to assess promising results in and expand IO investigator initiated portfolio independent trials STRATEGY Establish a leadership position in the emerging interventional oncology (IO) market 8
  • 9. Sterilization Technologies• $32.1 million in • Segment revenue revenues expected to be ~10% 2012 OUTLOOK lower than F2011 Q3 RESULTS• Supply agreements representing two-thirds • Co-60 revenue is of our 2012 Co-60 expected to be volumes significantly higher in• Signed multi-year the second half of 2012 supply agreement in compared with the first June with Japan half Radioisotope Association STRATEGY Maintain the value and selectively invest in growth opportunities 9
  • 10. Medical Isotopes• $19.7 million in • Solidify long-term 2012 OUTLOOK revenues supply• NRU one-month Q3 RESULTS • Opportunistically planned shutdown as grow our customer well as unplanned base for Medical supply interruptions in Isotopes as potential Q2 and Q3 impacted new customers revenues continue to diversify• Nordion is an their supply important player in the medical isotopes supply chain – vital to physicians and patients around the world STRATEGY Optimize the value of the business 10
  • 11. Third Quarter Fiscal 2012Earnings Conference Call Peter Dans Chief Financial Officer Sept. 6, 2012
  • 12. Q3 2012 Financial Performance Segmented Revenue (US$ millions)CONSOLIDATED RESULTS 80 70 60• Revenue of $67.1 million 50 32.1 32.1 40• GAAP net income of $12.3 million 30 21.4 19.7 20• Adjusted net income of $15.5 million 10 15.3 13.3 0 2011 2012 Q3 Segmented Earnings*SEGMENT RESULTS (US$ millions) 25• 13% revenue growth in TheraSphere 20 14.4• Co-60 shipments in Q3 higher than first 15 15.3 half of fiscal 2012 10 5.3 5• NRU shutdowns impacting volumes for 4.8 3.6 0 2.1 Mo-99 2011 2012 Q3 Targeted Sterilization Medical Isotopes Therapies Technologies * Excludes corporate segmented loss 12
  • 13. Strong Balance Sheet SOLID CASH AND LIQUIDITY POSITION REFLECTED IN NOTABLE FINANCIAL ASSETS: Cash & cash AECL note Deferred equivalents receivable tax asset $81.9 $2.3 $76.7 $US millions (as of July 31, 2012) 13
  • 14. Outlook2012 FINANCIAL OUTLOOKHIGHLIGHTS• TheraSphere, Cobalt-60 and Moly 99 are expected to: – Contribute about 80% of our revenues – Greater than 90% of our segment gross margins 14
  • 15. Third Quarter Fiscal 2012Earnings Conference Call Sept. 6, 2012