Patheon 1Q08

Patheon 1Q08

1Q Revenues: $164 million (+11%)

1Q Loss: $15 million (net loss of $2 million in 1Q07)

Comments: Revenues from European operations grew 35% to $20 million, but weakness of the U.S. dollar added $6.9 million to that result. On a constant exchange rate basis, European revenues grew 23% for the quarter. North American revenues dropped 3% in the quarter, dragged down by diminishing demand for a product manufactured at its Caguas, PR site. Revenues from development services grew 15% to $30 million in 1Q08.

During the quarter, Patheon completed the sale of its Niagara-Burlington OTC business; net proceeds amounted to $8.3 million. The sale of its York Mills, Toronto site should close in 2Q08. The company is also restructuring its operations in PR, including the planned sale of its Carolina, PR site.

Net loss was accounted for by $152 million in operating expenses, $2.4 million in restructuring costs, $11 million in depreciation & amortization, $2 million debt loss based on changing exchange rates, and an additional $8 million in debt servicing. Operating expenses grew from 87.3% of revenues in 1Q07 to 92.7% in 1Q08, “impacted by increased volumes, higher costs of utilities and the strengthening of European and Canadian currencies relative to the U.S. dollar,” according to the financial statement.