News
Patheon Reports Fourth Quarter Results
March 24, 2000
<%=company%> announces its results for the fourth quarter and the year ended October 31, 1999.
Revenues for the fourth quarter increased 67% to $36,056,000 from $21,640,000 a year ago. Net earnings for the quarter increased 59% to $2,374,000 (6 cents per share) from $1,497,000 (5 cents per share) after giving effect to a 25% increase in outstanding shares resulting from the completion of two equity issues during the year.
Operating income for the fourth quarter climbed 62% to $6,052,000 from $3,736,000 a year ago with operating margins of 17% equaling those achieved in 1998.
Revenues for the year ended October 31, 1999 increased 81% to $127,395,000 from $70,473,000 a year ago. Net earnings for the year, before the write-off of expenses incurred in the third quarter in connection with the discontinued acquisition, were $7,357,000 (18 cents per share). This unusual charge reduced final net earnings to 17 cents per share. Operating income almost doubled to $20,011,000 from $10,370,000 and operating margins increased by a full point to 16% compared to the previous year.
"These results continue the upward trend in revenues and net earnings resulting from Patheon's focused growth strategy," commented CEO Robert Tedford. "Not only are we satisfied with the contribution made by our Monza site acquired one year ago, but we are equally pleased to report substantial internal growth by our North American operations."
Subsequent to the year-end, Patheon completed the purchase of two sites from Hoechst Marion Roussel (HMR), the pharmaceutical company of Hoechst AG in Frankfurt, Germany. Concurrently two long-term contracts were entered into with HMR to continue manufacturing substantially all products being manufactured at each of these facilities. These sites in Swindon (UK) and Bourgoin (France) are important to the Company's European strategy and complement the site in Monza, Italy acquired from the Roche Group at the end of December 1998. The consideration for the acquisitions from HMR was satisfied by a combination of the proceeds from the Company's public offering in July 1999 (which raised $30,250,000) and bank lines of credit (an additional amount of approximately $16,000,000).
"As we enter fiscal 2000," continued CEO Tedford, "our immediate focus is on transforming these new sites into client-oriented manufacturing service business operations and on meeting our commitments to our new clients. We are enhancing our marketing, sales and service group so as to strengthen our European organization and bring new business to our sites in Italy, England and France. We have also embarked upon the strategy to replicate our pharmaceutical development services operations at one or more of our new European sites."
He concluded, "We are optimistic about the long-range growth opportunities for our business both in Europe and North America, and we are pursuing the acquisition of new long-term contracts and additional manufacturing facilities that meet our criteria."
At the end of the fourth quarter, outstanding orders for delivery in the subsequent three months are approximately $32.3 million, 74% higher than reported a year ago. This excludes the impact of orders under the new contracts with HMR for the months of December 1999 and January 2000 estimated to be in the $14 million range.
In early October, as previously announced, Patheon made application to the Ontario Superior Court of Justice seeking dissolution of Global Pharm Inc. and a court-ordered sale of the shares or assets of Global Pharm Inc. The Company has been dissatisfied with the performance of this 48%-owned affiliate and has been unable to resolve fundamental differences relating to the strategic direction of the company. In any court-ordered auction sale Patheon expects to be a bidder for all the shares it does not currently own. It is difficult to determine how long this process will take.
Patheon continues to monitor and test its systems in connection with the Company's Year 2000 readiness. At this time the Company has not identified any major issues that would affect its own compliance or that of its clients, its suppliers and other third parties. However, it is impossible to ascertain that all aspects of the Year 2000 issue affecting the Company will be fully resolved by December 31, 1999.
Patheon is a leading independent provider in North America and Europe of drug manufacturing and development services in the rapidly growing pharmaceutical outsourcing sector. Patheon and its 48% owned Global Pharm affiliate operate eight cGMP facilities in Canada and Europe, employing over 1,700 people. Patheon currently serves 16 of the world's 25 largest pharmaceutical companies and a growing number of pharmaceutical biotechnology companies from its North American and European operations.
