Patheon Fiscal 2013 Second Quarter Results June 3, 2013 Exhibit 99.2 |
Forward-looking statements 1 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, including risks related to acquisitions and divestitures, our operational excellence initiatives and transformation activities, our exposure to complex production issues, our substantial financial leverage, international operations, competition, government regulations, customer demand, potential environmental, health and safety liabilities, and product liability claims. For additional information regarding risks and uncertainties that could affect our business and our financial results, please see our Annual Report on Form 10-K for the fiscal year ended October 31, 2012 and our subsequent filings with the U.S. Securities and Exchange Commission and 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 Commencing with the first quarter of fiscal 2013, we revised our calculation of Adjusted EBITDA to exclude stock-based compensation expense, consulting costs related to our operational initiatives and purchase accounting adjustments. We believe that excluding these items from Adjusted EBITDA better reflects our underlying performance. Based on the revisions to the definition of Adjusted EBITDA, we have recast the presentation of Adjusted EBITDA for prior periods to be consistent with the current period presentation. Our Adjusted EBITDA (as revised) is now income (loss) from continuing operations before repositioning expenses, interest expense, foreign exchange losses reclassified from other comprehensive income (loss), refinancing expenses, acquisition and integration costs (including certain product returns and inventory write- offs recorded in gross profit), gains and losses on sale of capital assets, income taxes, asset impairment charges, depreciation and amortization, stock-based compensation expense, consulting costs related to our operational initiatives, purchase accounting adjustments and other income and expenses. "Adjusted EBITDA margin" is Adjusted EBITDA as a percentage of revenues. 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. Readers are cautioned that Adjusted EBITDA should not be construed as an alternative to net income (loss) determined in accordance with U.S. GAAP as an indicator of performance. Adjusted EBITDA is used by management as an internal measure of profitability. We have included Adjusted EBITDA because we believe that this measure 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 our underlying business. A reconciliation of Adjusted EBITDA to the closest U.S. GAAP measure is included in the Appendix to this presentation. |
• Revenue increased by 39.9% from prior year – Patheon standalone grew by 9.9% from prior year • Conversion to a gross profit increase of 67.6% from prior year • Adjusted EBITDA increase of $17.9 million from prior year • Transformation continues to yield benefits – Operational excellence initiatives being extended to manufacturing sites in High Point, Tilburg and Mexico Fiscal 2013 second quarter highlights 2 |
Strengthen core operations Sell business differently Enter logical adjacencies Drive industry consolidation • Transformation project – operations, procurement, pricing, G&A – paid for itself in one year • Network rationalization • Improve customer experience - focus on On Time Delivery (OTD) and Right First Time (RFT) • Improving margins • Commercial team to focus on key accounts • Executive insights - solicit key customer feedback for business positives and key improvements • Accelerating revenue growth • Banner acquisition adds proprietary technologies and products • Direct exposure to emerging markets (Latin America) • Top 10 CMOs are less than 50% of market with remaining share divided amongst 400 companies • Potentially 1/3 of companies could exit, which we expect will help with long-term pricing power • 26 acquisitions in CMO & PDS space in 2012 Strategy 3 |
181.5 203.7 210.0 213.5 253.9 100 120 140 160 180 200 220 240 260 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Revenues increased by $72.4 million from prior year Banner represented $54.6 million of the increase Revenues (U.S. $ in millions) 39.9% yr-yr revenue growth 4 |
Gross profit increased by $23.0 million from prior year Gross Profit (U.S. $ in millions) 67.6% yr-yr gross profit growth 5 10 15 20 25 30 35 40 45 50 55 60 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 34.0 55.5 55.4 42.4 57.0 |
Adjusted EBITDA increase of $17.9 million from prior year Adjusted EBITDA (U.S. $ in millions) 6 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 16.5 36.3 36.5 19.8 34.4 -15 -5 5 15 25 35 45 |
Strong liquidity position 140.0 120.0 100.0 80.0 60.0 40.0 20.0 - 2Q12 3Q12 4Q12 1Q13 2Q13 79.7 60.1 19.6 98.4 63.0 35.4 103.8 64.4 39.4 128.1 115.3 72.7 58.2 55.4 57.1 Cash Availability Liquidity 7 |
Summary financial results Three months ended April 30 Statement of Operations 2013 2012 Change (in millions of U.S. dollars) $ $ $ Revenues 253.9 181.5 72.5 Gross Profit 57.0 34.0 23.0 Selling, general and administrative expenses 41.6 34.7 (6.9) Operating income (loss) 7.2 (64.6) 71.8 Income (Loss) from continuing operations 0.1 (79.6) 79.7 Adjusted EBITDA 34.4 16.5 17.9 Balance Sheets Q2 2013 Q4 2012 Cash and cash equivalents 57.1 39.4 Inventories 139.9 82.3 Intangible assets 73.5 - Goodwill 45.5 3.5 Deferred tax liabilities (LT & ST) 56.0 23.0 Total debt (LT & ST) 603.1 313.1 Undrawn lines of credit 58.2 64.4 8 |
• Provide industry leading customer experience – Right First Time (RFT) and On Time Delivery (OTD) • Exceed industry growth rates • Complete Banner integration • Continue to improve financial results – Margin expansion – Free cash flow – Stock appreciation 2013 priorities 9 |
Thank you 10 |
Appendix Adjusted EBITDA (unaudited) Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 (in millions of U.S. dollars) $ $ $ $ $ (Loss) income from continuing operations (79.6) 15.5 (23.0) (51.4) 0.1 Depreciation and amortization 10.8 9.3 10.1 11.0 12.2 Repositioning expenses 6.0 0.1 (0.8) 4.0 2.5 Acquisition and integration costs - - 3.2 4.4 9.8 Interest expense, net 6.5 6.8 6.7 9.8 12.6 Impairment charge 57.9 - - 10.1 - Loss (gain) on sale of capital assets - - 0.4 (0.3) (1.3) Provision for (benefit from) income taxes 8.0 3.3 39.8 (0.2) (6.2) Refinancing expenses - - - 29.1 0.1 Consulting 6.0 1.0 - 0.1 1.8 Stock compensation expense 0.8 0.7 0.6 0.8 0.9 Purchase accounting adjustments - - - 2.9 2.1 Other expense (income), net 0.1 (0.4) (0.5) (0.5) (0.2) Adjusted EBITDA 16.5 36.3 36.5 19.8 34.4 11 |