Patheon's Q3 2013 revenues increase 30.4% to $265.7 million

Sep 5 2013

Top-line growth at 30.4 percent; Banner integration complementing business lines

Patheon Inc. (TSX: PTI), a leading provider of contract development and commercial manufacturing services to the global pharmaceutical industry, with recently acquired proprietary products, announced today fiscal 2013 third quarter results.

Third Quarter Fiscal 2013 Financial Highlights  

• Revenues in the quarter increased to $265.7 million from $203.7 million in the same period last year, an increase of $62.0 million or 30.4 percent. Revenue resulting from the Banner acquisition was $66.4 million in the quarter.
   
• Gross profit in the quarter improved to $71.1 million from $55.5 million in the same period last year, an increase of $15.6 million or 28.1 percent.
   
• Adjusted EBITDA increased in the quarter to $41.0 million from $36.4 million in the same period last year, an increase of $4.6 million.
   
• Income from continuing operations in the quarter was $4.3 million compared to income from continuing operations of $15.5 million in the same period last year. This decrease was due to higher repositioning and interest expenses, as well as higher selling, general and administrative expenses, research and development expenses and other charges associated with the Banner acquisition, partially offset by higher gross profit.

"This was another successful quarter for Patheon, and we are pleased with the ongoing performance of our business. The integration of Banner is complete, and our transformation initiatives continue to yield results as we implement operational excellence activities across our global network," stated Jim Mullen, Chief Executive Officer. "Overall, revenue flow across quarters has been more balanced this year, and we are encouraged by this continuing trend. We continue to drive additional margin from the business with our year-to-date Adjusted EBITDA margin of 13 percent compared to 9.5 percent in the prior period. We believe that Patheon remains on track to achieve anticipated revenues in excess of $1 billion this fiscal year."

Fiscal 2013 Third Quarter and Nine Month Period Ended July 31, 2013, Operating Results from Continuing Operations

Revenues for the third quarter increased $62.0 million, or 30.4 percent, to $265.7 million, from $203.7 million in the same period last year driven by $66.4 million of additional revenues resulting from the Banner acquisition. Commercial manufacturing (CMO) revenues for the third quarter increased $59.5 million, or 35.4 percent, to $227.8 million, from $168.3 million in the same period last year, primarily due to the additional revenues resulting from the Banner acquisition. Pharmaceutical Development Services (PDS) revenues for the third quarter increased $2.5 million, or 7.1 percent, to $37.9 million, from $35.4 million in the same period last year.

Revenues for the nine month period ended July 31, 2013 increased $194.0 million, or 36.0 percent, to $733.1 million, from $539.1 million in the same period last year, driven by growth in existing business and $144.2 million of additional revenues resulting from the Banner acquisition.

CMO revenues for the nine month period ended July 31, 2013 increased $189.3 million, or 43.2 percent, to $627.4 million, from $438.1 million in the same period last year, primarily due to additional revenues resulting from the Banner acquisition. PDS revenues for the nine month period ended July 31, 2013 increased $4.7 million, or 4.7 percent, to $105.7 million, from $101.0 million in the same period last year.

Gross profit for the third quarter improved by $15.6 million to $71.1 million, from $55.5 million in the same period last year, primarily due to an increase in volumes from the Banner acquisition. Patheon standalone margins improved primarily as a result of favorable foreign exchange rates.

Gross profit for the nine month period ended July 31, 2013 increased $66.6 million to $170.5 million, from $103.9 million for the same period last year. The increase in gross profit margin was driven by higher volumes and savings from operational excellence initiatives, partially offset by $5.0 million in increased costs of goods sold related to the fair value mark-up of Banner's inventory from the acquisition, $5.0 million in higher inventory write-offs and $3.1 million in product returns from a packaging site attributed to Banner operations.

Income from continuing operations for the third quarter was $4.3 million, or 3.1¢ per share for basic and 3.0¢ per share for diluted, compared to income from continuing operations of $15.5 million, or 12.0¢ per share, both basic and diluted, in the same period last year.

Loss from continuing operations for the nine month period ended July 31, 2013 was $46.9 million, or (33.7)¢ per share, both basic and diluted, compared to a loss from continuing operations of $83.3 million, or (64.3)¢ per share, both basic and diluted, in the same period last year.

Adjusted EBITDA increased in the quarter to $41.0 million from $36.4 million in the same period last year, an increase of $4.6 million. Higher volumes and the results of operational excellence programs contributed to the increase. The Adjusted EBITDA margin for the third quarter was 15.4 percent compared to 17.9 percent in the same period last year.

2013 Outlook

The company anticipates revenues for the combined enterprise to be in excess of $1 billion for fiscal 2013.

SOURCE Patheon Inc.