Nordion Earnings Call NUGGETS: Medical Isotope Business, Amortization
On Thursday, Nordion, Inc. (NYSE:NDZ) reported its third quarter earnings and discussed the following topics in its earnings conference call. Take a look.
Medical Isotope Business
Lennox Gibbs – TD Newcrest: Just with respect to $20 million decline in revenues that you discussed with respect to 2013, is there any evidence to suggest that your medical isotope business could stabilize in that new $70 million range or the pricing and market share pressures likely to continue possibly take you lower beyond 2013?
Peter Dans – CFO: So, again, with our medical isotope business, given our history there again we focused on delivering quality products on time and provide flexibility with our customers. However, given the current state, we can only deliver that when the NRU is operational. So, when we look at the changes that are taking place in the market today that led us to the update we provided in 2013. Those are the current dynamics that we’re seeing in the market. As we move forward, our customers are looking to regain market share and we continue to look to support our customers going forward. So, again, we’ll have to see how the market evolves in 2013 from both the supply and demand perspective and at that point, we’d be able to provide more color around what will happen in the future.
Lennox Gibbs – TD Newcrest: So, you don’t really have a long-term view at this point, is that what you’re saying?
Peter Dans – CFO: Again, just given the dynamics in this market it’s something we can continue to monitor and we’ll continue to provide update as they are available.
Lennox Gibbs – TD Newcrest: Just a follow-up in that same regard, so with respect to the U.S. Government’s decision to pay a premium for LEU derived isotopes, under surface that looks like a negative for you, where and how did that consideration factor into the guidance you provided, that is the $15 million to $20 million decline you discussed for 2013?
Steve M. West – CEO: So that is an issue, but that’s not the primary driver in the guidance that we are giving, I think it remains to be seen how that plays out and how it actually even gets implemented in United States at the time and there is still quite a bit of industry discussion ongoing about that and I think that it’s actually quite premature to speculate how that will play out. I think our guidance is frankly more around what we see in the marketplace. What we see going on particularly with our largest customer and some of the challenges that they have been experiencing in market share. Hopefully that we’re going to be working with our customer to enable them to regain market share.
Lennox Gibbs – TD Newcrest: So that could be an incremental pressured then? That is, the reimbursement policy to shift?
Steve M. West – CEO: I think we just have to see how it plays out, it’s really bit too early days at the moment. We have to see how it gets implemented and what impact it has, if any.
Unidentified Analyst: Just a quick question on your amortization. I guess some of your systems are fully amortized, so should we expect this current level of amortization to pretty much trend under these levels?
Peter Dans – CFO: Yes, that’s correct. So with our depreciation, we just completed depreciation of a large Oracle implementation that Nordion did in its former MDF configuration, so the new depreciation level will continue forward and more reflects our current business operations and size.