Atrium Innovations Announces 2011 First Quarter Financial Results

Strong Contribution from Acquisitions coupled
with Solid Organic Growthof the Branded Business

QUEBEC CITY, May 10 /CNW Telbec/ - Atrium Innovations Inc. (TSX: ATB), a globally recognized leader in the development, manufacturing, and commercialization of innovative, science-based dietary supplements endorsed by health professionals, today released its 2011 first quarter results for the period ended March 31, 2011.

2011 Highlights:
(All amounts are in US dollars.)

  • Revenue growth of 19.7% over previous year to reach $107.8 million
  • Strong contribution of Seroyal acquisition with integration progressing very well
  • Branded organic growth reached 6.4%
  • EBITDA of $23.4 million or 21.7% of revenues, an increase of 10.3% compared to last year
  • Diluted EPS of $0.43 for the quarter
  • Cash flow before working capital was up 23.7% to $18.8 million.

"During the quarter, we successfully progressed with the integration of Seroyal and started to implement a new management structure to support our next growth phase," said Pierre Fitzgibbon, President and Chief Executive Officer. "We experienced strong revenue growth of 19.7% this quarter. We also want to highlight the solid global organic performance of all our branded products which, combined, achieved 6.4% growth during the quarter".

"As expected, the EBITDA margin during the quarter was somewhat negatively impacted by above normal levels of selling, general & administrative expenses, reflecting our intense marketing initiatives in Germany. We are pleased by the positive impact that our marketing campaign is having on revenues and the progress made in restoring our market share. At this stage we decided to maintain current investments in marketing in the second half of 2011 to fully secure our rebuilding efforts of the past few quarters. Consequently, we are reducing the guidance of our EBITDA margin range by 1%, to 23%-24%."

"Our first quarter results have reached record levels on several financial metrics. The industry fundamentals enjoy solid momentum, particularly in North America, and Atrium is benefiting. 2011 will be a strong year and we remain committed to investing in our business to achieve our goals," concluded Mr. Fitzgibbon.

For the quarter ended March 31, 2011, Atrium recorded revenues of $107.8 million representing an increase of 19.7% compared to revenues of $90.1 million in 2010. This increase is mainly attributable to the acquisition of Seroyal as well as to organic growth of the Company's branded business.

EBITDA increased by 10.3% to $23.4 million or 21.7% of revenues compared to $21.2 million or 23.5% of revenues for the same period in 2010. The acquisitions of Seroyal, Trophic and Minami contributed to the increase in EBITDA.

Net earnings attributable to shareholders were $14.1 million in 2011 compared to $12.4 million in 2010, representing an increase of 13.6%. Net earnings per share ("EPS") on a diluted basis rose to $0.43 per share, as compared to $0.37 per share for the same period in 2010.

Cash flows from operating activities before changes in non-cash working capital items were $18.8 million compared to $15.2 million in 2010. As at March 31, 2011, the Company had a total debt of $313.3 million and a cash position of $18.3 million. Subsequent to quarter-end under an option of its credit agreement, the Company has increased the authorized amount of its revolving credit facility from $300 million to $325 million of which approximately $26 million is available.

"Cash flow before working capital reached a record level of $18.8 million during the quarter, an increase of 23.7% over the same period last year," said Mario Paradis, Chief Financial Officer of the Company. "During the first quarter, we opted to expand our borrowing capacity to provide us with greater financial flexibility. From December 31, 2010 and the end of the first quarter, the strengthen of the Euro over the US dollars resulted in an increase of $13 million in our long-term debt denominated in euro. In mid-November 2010, our normal course issuer bid became effective and 100,000 shares were acquired under this program during the first quarter of 2011. Subsequent to the quarter end, an additional amount of 20,200 shares was acquired. Considering our strong and steady cash flow, we remain comfortable with our financial position and ratios."

About Atrium

Atrium Innovations Inc. is a globally recognized leader in the development, manufacturing, and commercialization of innovative, science-based natural health products endorsed by health professionals. The Company distributes its extensive portfolio of products mainly in the healthcare practitioner and health food and specialized store channels, with a primary focus in North America and Europe. Atrium is at the forefront of science, innovation and education in the dietary supplement industry.  The Company has over 1,000 employees and operates seven manufacturing facilities. Additional information is available at www.atrium-innovations.com.

Conference Call and Webcast

Atrium will hold its quarterly conference call and webcast to discuss its 2011 first quarter results on Tuesday May 10, 2011 at 5:30 p.m., Eastern Time. Participants may access the call by using the following numbers: 514-807-8791, 877-974-0445, or 416-644-3426. A live webcast is also available via the Company's website at www.atrium-innovations.com in the News Center section. A replay of the webcast will also be available on our website for a period of 30 days. A copy of Atrium's interim unaudited financial statements will also be available on the Company's website.

Caution Regarding Non-IFRS Financial Measures

The Company provides non-IFRS financial measures (gross profit*, EBIT*, and EBITDA*) as supplemental information regarding its operational performance. These non-IFRS financial measures are directly derived from the Company's financial statements and are presented in a consistent manner. The Company uses these measures for the purposes of evaluating its historical and prospective financial performance, as well as its performance relative to competitors. These measures also help the Company to plan and forecast for future periods as well as to make operational and strategic decisions. The Company believes that providing this information to investors, in addition to IFRS measures, allows them to see the Company's results through the eyes of management, and to better understand its historical and future financial performance.

The presentation of this additional information is not prepared in accordance with IFRS. Therefore, the information may not necessarily be comparable to that of other companies and should be considered as a supplement to, not a substitute for, or superior to, the comparable measures calculated in accordance with IFRS.

* Gross profit means sales less cost of sales. EBIT means earnings before interest and tax. EBITDA means earnings before interest, tax, depreciation, amortization and acquisitions costs.

Cautionary Note and Forward-Looking Statements

This press release contains certain forward-looking statements with respect to the Company. These forward-looking statements, by their nature, require the Company to make certain assumptions and necessarily involve known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied in these forward-looking statements. Forward-looking statements are not guarantees of performance. These forward-looking statements, including financial outlooks, may involve, but are not limited to, comments with respect to the Company's business or financial objectives, its strategies or future actions, its targets, expectations for financial condition or outlook for operations and future contingent payments. Words such as "may", "will", "would", "could", "expect", "believe", "plan", "anticipate", "intend", "estimate", "continue", or the negative or comparable terminology, as well as terms usually used in the future and the conditional, are intended to identify forward-looking statements.

Information contained in forward-looking statements is based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including management's perceptions of historical trends, current conditions and expected future developments, as well as other considerations that are believed to be appropriate in the circumstances.  The Company considers these assumptions to be reasonable based on information currently available to it, but cautions the reader that these assumptions regarding future events, many of which are beyond its control, may ultimately prove to be incorrect since they are subject to risks and uncertainties that affect the Company and its business.

For additional information with respect to these and other factors and assumptions underlying the forward-looking statements made in this press release, see the Company's quarterly and annual Management Discussion and Analysis for the fiscal year ended December 31, 2010 filed with the Canadian securities commissions. The forward-looking information set forth herein reflects the Company's expectations as at the date of this press release and is subject to change after such date. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, other than as required by law.

Attachments:  Financial summary
Balance sheet, results and cash flow statement

Atrium Innovations Inc.
Financial Summary (unaudited)
(in millions of US dollars except per share amounts)
 
Consolidated results for the quarters ended March 31,
(unaudited)
  2011
$
  2010
$
  Change
           
Revenues 107.8   90.1   20%
           
Gross profit (1) 60.8   51.6   18%
  56.4%   57.3%    
           
EBITDA (2) 23.4   21.2   10%
  21.7%   23.5%    
           
Net earnings attributable to shareholders 14.1   12.4   14%
           
Net earnings per share          
  Basic 0.43   0.38    
  Diluted 0.43   0.37    
           
             
             
Reconciliation to non IFRS Financial Data          
Net earnings attributable to shareholders 14.1   12.4    
  Acquisition-related costs and interest expenses
for acquisition-related contingent liabilities
(after-tax)
0.1   0.6    
Net earnings 14.2   13.0    
Net diluted earnings per share 0.43   0.39    

(1) Gross profit means sales less cost of goods sold.
(2) EBITDA means earnings before interest, taxes, depreciation, amortization and acquisition related costs.



Atrium Innovations Inc.
Consolidated Balance Sheets
(Expressed in thousands of US dollars)
 
  As at March 31,   As at December 31,
  2011
$
  2010
$
Assets      
       
Current assets      
Cash 18,298   12,049
Accounts receivable 56,811   50,070
Income taxes recoverable 6,316   5,018
Inventory 83,035   79,243
Prepaid expenses 5,846   4,384
       
  170,306   150,764
Property, plant and equipment 21,808   21,916
Deferred charges and others 3,669   3,238
Intangible assets 262,234   251,939
Goodwill 371,180   360,963
Deferred tax assets 9,446   8,564
  838,643   797,384
       
Liabilities      
Current liabilities      
Accounts payable and accrued liabilities 37,894   38,564
Provision 3,019   3,351
Purchase price adjustment -   -
Contingent considerations 5,319   17,583
Income taxes 589   1,148
Deferred revenues 716   944
Current portion of long-term debt 211   217
  47,748   61,807
Long-term debt 313,057   275,614
Deferred tax liabilities 72,708   68,970
Contingent considerations 11,910   11,877
Deferred revenues 154   218
Derivative financial instruments 1,195   2,256
  446,772   420,742
Shareholders' Equity      
Share capital 91,290   92,664
Stock option reserve 1,829   1,767
Retained earnings 302,722   288,607
Accumulated other comprehensive (4,449)   (6,576)
  391,392   376,462
Non-controlling interest 479   180
  391,871   376,642
  838,643   797,384




Atrium Innovations Inc.
Consolidated Statements of Earnings
(tabular amounts in thousands of US dollars, except share and per share data)

  Quarters Ended March 31, 
  2011
$
  2010
$
       
Revenues 107,752   90,053
       
Operating expenses      
Cost of sales 46,955   38,456
Selling and administrative expenses 38,595   31,908
Research and development costs 569   558
  86,119   70,922
       
Earnings from operations 21,633   19,131
       
Other revenues (expenses)      
Financial revenues 46   221
Financial expenses (1,999)   (1,764)
Foreign exchange loss (197)   (45)
  (2,150)   (1,588)
       
Earnings before the following items 19,483   17,543
       
Income tax expense 5,069   5,113
       
Net earnings for the period 14,115   12,430
       
Net earnings for the period attributable to      
Shareholders 14,115   12,430
Non-controlling interest 299   -
       
Net earnings per share      
Basic 0.43   0.38
Diluted 0.43   0.37
       
Weighted average number of shares outstanding (000's)      
Basic 32,774   32,667
Diluted 33,203   33,209


Atrium Innovations Inc.
Consolidated Statements of Cash Flows
(expressed in thousands of US dollars)

  Quarters Ended March 31,
  2011
$
  2010
$
Cash flows from operating activities      
Net earnings for the period 14,414   12,430
       
Adjustments for:      
  Depreciation and amortization 1,738   1,428
  Deferred charges 47   177
  Deferred revenues (319)   (273)
  Stock-based compensation costs 89   71
  Interest expense 1,611   1,476
  Deferred income taxes 1,269   (82)
Change in non-cash operating working capital items (13,355)   (14,830)
       
Cash flows from operating activities 5,494   397
       
Cash flows from financing activities      
Increase in long-term debt 232,711   24,513
Payments on long-term debt (212,903)   (1,370)
Deferred financing costs (189)   (33)
Issuance of shares 188   48
Redeemed and cancelled under a normal course issuer bid (1,589)   -
Interest paid (1,207)   (1,419)
       
Cash flows from financing activities 17,011   21,739
       
Cash flows from investing activities      
Business acquisitions, net of cash acquired (12,623)   (27,296)
Purchase of property, plant and equipment (459)   (796)
Acquisition of intangible assets (2,101)   (157)
       
Cash flows from investing activities (15,183)   (28,249)
       
Net change in cash 7,322   (6,113)
       
Effect of exchange rate changes on cash (1,073)   (532)
       
Increase (decrease) in cash 6,249   (6,645)
       
Cash - Beginning balance 12,049   17,167
       
Cash - Ending balance 18,298   10,522

 

 

 

 

SOURCE ATRIUM INNOVATIONS INC.

For further information:

Investor Relations
Mario Paradis
Vice President and Chief Financial Officer
Tel.: 418 652-1116 
mp@atrium-innovations.com 
Media Relations:
Amélie Germain
Director of Communications
Tel.: 418 652-1116 
ag@atrium-innovations.com 
   
Pierre Boucher
MaisonBrison Communications
Tel.: 514 731-0000, ext. 237
pierre@maisonbrison.com 

 

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ATRIUM INNOVATIONS INC.

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