Attached files
| file | filename |
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| 8-K - FORM 8-K - PATHEON INC | d312377d8k.htm |
| EX-99.1 - PRESS RELEASE - PATHEON INC | d312377dex991.htm |
 Patheon
Fiscal 2012 First Quarter Earnings
Friday, March 9, 2012
Exhibit 99.2 |
 1
Forward-Looking Statements
This presentation contains forward-looking statements or information which reflect our
expectations regarding possible events, conditions, our future growth, results of
operations, performance, and business prospects and opportunities. All statements, other
than statements of historical fact, are forward-looking statements. Forward-looking
statements necessarily involve significant known and unknown risks, assumptions and
uncertainties that may cause our actual results in future periods to differ materially from those
expressed or implied by such forward-looking statements. These risks are described in Item
1A “Risk Factors” in our Annual Report on Form 10-K for the fiscal year
ended October 31, 2011 filed with the U.S. Securities and Exchange Commission and with the
Canadian Securities Administrators. Accordingly, you are cautioned not to place undue reliance
on forward-looking statements. These forward-looking statements are made
as of the date hereof, and except as required by law, we assume no obligation to update
or revise them to reflect new events or circumstances. Use of Non-GAAP Financial
Measures
References “Adjusted EBITDA” are to income (loss) before discontinued operations
before repositioning expenses, interest expense, foreign exchange losses reclassified
from other comprehensive income, refinancing expenses, gains and losses on sale of fixed asset
gain on extinguishment of debt, income taxes, asset impairment charge, depreciation and
amortization and other income and expenses. Since Adjusted EBITDA is a
non-GAAP measure that does not have a standardized meaning, it may not be comparable to
similar measures presented by other issuers. You are cautioned that these non-GAAP
measures should not be construed as alternatives to net income (loss) determined in
accordance with GAAP as indicators of performance. Adjusted EBITDA is used by
management as an internal measure of profitability. We have included these measures
because we believe that this information is used by certain investors to assess our
financial performance, before non-cash charges and certain costs that we do not believe are
reflective of its underlying business. An Adjusted EBITDA reconciliation of these
amounts to the closest U.S. GAAP measure is included in the appendix.
|
 •
Financial results
•
Transformation update
•
Q&A
Agenda
2 |
 Associated with cancellation of a manufacturing agreement
Financial Overview (U.S. GAAP)
7.8% revenue growth excluding the
benefit from contract cancellation
REVENUE
(U.S. $ in millions)
Reported revenue including the benefit from the contract cancellation
3 |
 Financial
Overview (U.S. GAAP) (U.S.$ in millions)
Reported Adjusted EBITDA includes the benefit from the contract cancellation and
the additional expense from consulting fees 4 |
 5
Summary Balance Sheet and Cash Flow (U.S. GAAP)
(U.S.$ in millions)
2012 -
Q1
2011 -
Q4
Cash and cash equivalents
32.5
33.4
A/R
125.0
158.0
Inventory
83.0
81.8
Capital assets
458.6
474.2
Total assets
784.1
824.6
AP and accrued liabilities
176.8
181.5
Total debt
284.0
287.3
Total deferred revenue
38.1
36.5
Other long-term liabilities
51.4
53.7
Total liabilities
577.1
586.9
Shareholders' equity
207.0
237.7
Cash flow from operations
9.9
11.2
Cash used from investing
(6.5)
(16.6)
Period ended liquidity*
126.3
128.3
*Comprised of cash and cash equivalents and undrawn lines of credit.
|
 6
Our Situation Today
#2 market share in CMO
#1 market share in PDS
Below average financial performance
Good reputation with customers but uneven operational
performance
6 |
 7
Our Goal
#1 market share in PDS
#1 market share in CMO, with above market growth
Top quartile financial performance and improved profitability
Best reputation in quality, delivery and cost
competitiveness 7 |
 8
Five Commitments
Provide the industry’s leading customer experience.
Operate our business in a disciplined, responsible, and ethical
fashion such that our shareholders will appreciate superior
returns over time.
Provide the best technical and scientific solutions to solve
difficult development problems and enhance product value.
Create a culture of engagement, ownership and a shared
commitment to excellence in all that we do.
Be the highest quality, most flexible, and lowest cost
producer in the world.
8 |
 9
Strategy
Our strategy boils down to improving what we
do, how we sell, then grow our business into
adjacencies inorganically
Strengthen
core operations
Sell business
differently
Enter logical
adjacencies
Drive industry
consolidation |
 10
Operational excellence roll-out across
the organization
Increasing efficiency, productivity in our sites
-
Underway in the U.S. and Canada
-
Beginning in Europe and Puerto Rico
-
Centers of Excellence roll-out by site
-
Expanded the program into SG&A and
procurement
Strategy –
Strengthen the Core
Strengthen core
operations |
 11
Solution and “targeted”
selling build on our
strengths
Recent successes
-
SoluPath
™
-
Sterile back-up supply
-
End-to-end solutions provider
from PDS to CMO
-
Strategic partnerships
Strategy –
Sell the Business Differently
Sell business
differently |
 Four core dimensions
-
Value Chain
•
Early development
•
Supply chain integration
-
New capabilities –
P-Gels™
and SoluPath™
-
Technology –
proprietary drug delivery
-
Geography –
emerging markets
Enter logical
adjacencies
Strategy –
Enter Local Adjacencies
12 |
 P-Gels™
•
Prescription
soft gels for North America, Europe
and Asia –
mutually exclusive for Rx soft gels in
the territory
–
Development services –
Cincinnati or Barranquilla
–
Commercial manufacturing –
Barranquilla
•
Joint selling and execution by Patheon and
for
our
joint
opportunities
–
will
be
branded as a unique solution --
P-Gels™
•
Combines Patheon’s depth and breadth of
development services, and customer access,
with Softigel’s world-class softgel expertise
13
Softigel |
 Outcomes
Provide the industry’s leading customer experience.
Operate our business in a disciplined, responsible, and ethical
fashion such that our shareholders will appreciate superior
returns over time.
Provide the best technical and scientific solutions to solve
difficult development problems and enhance product value.
Create a culture of engagement, ownership and a shared
commitment to excellence in all that we do.
Outcome equals
long-term
broad
strategic
relationships
Outcome equals top quartile
performance on shareholder
returns, and other financial
metrics
1
2
3
4
5
Be the highest quality, most flexible, and lowest cost
producer in the world.
Outcome equals deepening
our #1 position in PDS
Outcome equals high-
performance, high-quality
industry leadership
14 |
 Summary
•
Underlying revenues are growing
•
Transformation activities are on track
•
Balance sheet and liquidity are good
15 |
 Q&A
16 |
 Appendix
Adjusted EBITDA Bridge (US GAAP)
(unaudited)
Q1 2010
Q2 2010
Q3 2010
Q4 2010
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
(in millions of U.S. dollars)
$
$
$
$
$
$
$
$
$
Adjusted EBITDA
8.3
26.0
20.4
26.2
28.7
12.9
10.3
14.5
(9.2)
Depreciation and amortization
(14.9)
(13.5)
(12.6)
(14.6)
(14.9)
(13.5)
(12.6)
(12.2)
(10.6)
Repositioning expenses
(2.4)
(1.0)
(2.4)
(1.0)
(0.9)
(0.7)
(1.9)
(3.5)
(0.8)
Interest expense,
net
(3.6)
(3.3)
(6.3)
(6.4)
(6.3)
(6.4)
(6.3)
(6.6)
(6.5)
Impairment charge
(1.3)
-
(2.1)
(0.2)
-
-
-
-
-
Refinancing
expenses
-
(11.7)
(0.3)
(0.2)
-
-
-
-
-
(Loss) gain on sale of fixed
assets
-
(0.1)
-
(0.1)
-
(0.2)
0.1
(0.1)
-
Provision for (benefit from) income taxes
11.8
8.1
(2.5)
(3.6)
(2.7)
(2.1)
4.7
(1.0)
7.7
Other income (expense), net
0.4
0.1
0.3
(0.5)
(0.2)
(0.3)
6.3
(0.9)
0.1
(Loss) income before discontinued
operations
(1.7)
4.6
(5.5)
(0.4)
3.7
(10.3)
0.6
(9.8)
(19.3)
17 |