Patheon third quarter revenues increase to $203.7 million

Patheon Inc. (TSX: PTI), a leading provider of contract development and manufacturing services to the global pharmaceutical industry, announced today fiscal 2012 third quarter and nine month results.

Third Quarter Fiscal 2012 Financial Highlights

• Revenues in the quarter increased to $203.7 million from $172.7 million in the same period last year, an increase of 18.0 percent.
• Gross profit in the quarter increased to $55.5 million from $25.8 million in the same period last year, an increase of 115.1 percent.
• Adjusted EBITDA increased in the quarter to $34.6 million from $10.3 million in the same period last year, an increase of 235.9 percent.
• Income before discontinued operations in the quarter improved to $15.5 million from income before discontinued operations of $0.6 million in the same period last year.

James C. Mullen, Patheon's Chief Executive Officer said, "We continue to be encouraged by the progress we make in transforming the company.  Our top line growth in the quarter was strong.  Our transformation activities continue on track, and we are seeing the results of those efforts in our margins.  As a result of the strong growth in the quarter, we are increasing our revenue guidance for the year to be in excess of $735 million."

Fiscal 2012 Third Quarter and Nine Month Operating Results from Continuing Operations
Revenue for the third quarter increased $31.0 million, or 18.0 percent, to $203.7 million, from $172.7 million in the same period last year, driven by growth in existing business, and supported by our transformation activities.  Without the negative impact of foreign exchange, revenues would have increased by approximately 24.1 percent.

Commercial manufacturing (CMO) revenues for the third quarter increased $29.6 million, or 21.3 percent, to $168.3 million, from $138.7 million in the same period last year.  Pharmaceutical Development Services' revenues for the third quarter increased $1.4 million, or 4.1 percent, to $35.4 million, from $34.0 million in the same period last year.

Revenue for the nine month period increased $20.7 million, or 4.0 percent, to $539.1 million, from $518.4 million in the same period last year.  Without the negative impact of foreign exchange, revenues would have increased approximately 7.1 percent.  The year-over-year growth in the nine month period would have been up 15.2 percent excluding the benefit from the contract cancellation in the prior year.

Commercial manufacturing revenues for the nine month period increased to $438.1 million, or 2.9 percent, from $425.8 million in same period last year. Excluding the $50.3 million benefit from the contract cancellation recorded in the first half of fiscal 2011, commercial manufacturing revenues would have increased by 16.7 percent. PDS revenues for the nine month period increased to $101.0 million, or 9.1 percent, from $92.6 million in the same period last year.

Gross profit for the third quarter increased $29.7 million to $55.5 million, from $25.8 million last year. The increase in gross profit was primarily due to higher volumes, operating efficiencies, favorable material mix and lower depreciation expense.

Gross profit for the nine month period increased to $103.9 million from $98.3 million in the same period last year. Excluding the $50.3 million benefit from the prior year contract cancellation, gross profit in the nine month period would have increased by $55.9 million. The increase in gross profit was primarily due to higher volumes and lower depreciation expense, partially offset by the unfavorable impact associated with replacing high margin revenue from the cancelled contract with ongoing production at our normal margins.

Income before discontinued operations for the quarter was $15.5 million, or 12.0¢ per share, both basic and diluted, compared to income before discontinued operations of $0.6 million, or 0.5¢ per share, both basic and diluted, in the same period last year.  The net loss before discontinued operations for the nine months was ($83.3) million, or (64.5¢) per share compared to a loss of ($6.0) million, or (4.6¢) per share in the same period of fiscal 2011. The net loss before discontinued operations for the nine months ended July 31, 2012 was primarily due to the after tax impact of the previously announced impairment charges of $57.9 million and repositioning expenses of $6.4 million, as well as the after tax impact of $12.1 million from the consulting fees related to strategic initiatives.

2012 Outlook
Based on encouraging revenue trends in the first nine months of the year the company is increasing its full year revenue guidance.  The company expects 2012 revenue to exceed $735 million.