Atrium Innovations Announces First Quarter Financial Results of 2010

Solid Performance with Particular Strength in the U.S.

QUEBEC CITY, May 10 /CNW Telbec/ - Atrium Innovations Inc. (TSX: ATB), a recognized leading developer, manufacturer and marketer of professionally endorsed, science-based products for the health and nutrition industry, today released its financial results for the first quarter of 2010.

    
    First Quarter Highlights:
    (All amounts are in US dollars)

    - Revenue and EBITDA growth of 27.5% and 19.5%
    - Double digit growth of the U.S. branded business
    - EBITDA of $21.2 million or 23.5% of revenues
    - Net earnings of $13.0 million up 22.8%
    - EPS of $0.39, up from $0.32 last year
    - Acquisition of Trophic Canada, a leading manufacturer and distributor
      of nutritional supplements in the Canadian health food store market
    

"Our solid first quarter was driven by the effect of the acquisition of Garden of Life and the strong momentum of our branded businesses, particularly in the U.S. market. European market conditions remained generally stable," said Pierre Fitzgibbon, President and Chief Executive Officer. "The acquisition of Trophic Canada during the quarter added a leading brand to our portfolio and the missing component to spearhead a broader and more aggressive growth strategy to enhance our share of the Canadian market. The integration process is well underway and is progressing on schedule.

"Our worldwide deployment strategy for Wobenzym is progressing very well as evidenced by the revenue growth we experienced with our Wobenzym products in the U.S., the Central Eastern European countries, and recently Italy. However, total sales of Wobenzym decreased slightly due to the transition period in Germany where the shift to Wobenzym P has presented some challenges. We are confident that our multi-product strategy will maintain and widen the consumer appeal of Wobenzym."

"We expect continued growth in our U.S. branded business, supported by strong industry fundamentals. We have reached a point in the evolution of our business model where our revenues and operations are now well diversified," concluded Mr. Fitzgibbon.

For the first quarter ended March 31, 2010, Atrium recorded revenues of $90.1 million representing an increase of 27.5% compared to revenues of $70.6 million for the corresponding period in 2009. The increase is mainly attributable to the acquisition of Garden of Life, and to organic growth of branded product businesses. Excluding the positive impact of the euro/US dollar exchange rate when we compared to the corresponding period last year, revenues would have increased by 25.1%.

Gross profit for the first quarter was $51.6 million compared to $38.5 million for 2009, an increase of $13.1 million or 34.0%. The increase in gross profit is primarily attributable to the acquisition of Garden of Life and to organic growth. For the first quarter, gross margin increased from 54.5% in 2009 to 57.3% in 2010. The gross margin increased due to the more favorable business mix of revenues and the integration of our Berlin manufacturing plant.

EBITDA (earnings before interest, taxes, depreciation and amortization) for the first quarter of 2010 increased by 19.5% to $21.2 million or 23.5% of revenue compared to $17.7 million or 25.1% of revenues for the same period in 2009. Excluding the impact of the euro/US dollar exchange rate, EBITDA would have increased by 16.6%.

Net earnings for the quarter were $13.0 million compared to $10.6 million in 2009, representing an increase of 22.8%. EPS for the quarter were $0.39 per diluted share compared to $0.32 per diluted share in 2009.

Cash flows from operating activities before changes in non-cash working capital items were $14.5 million in 2010, an increase of 24.2% compared to $11.6 million in 2009. As at March 31, 2010, the Company had a total debt of $185.2 million and a cash position of $10.5 million. The Company has a revolving credit facility that provides $300 million of borrowing capacity with no debt refinancing before July 2012.

About Atrium

Atrium Innovations Inc. is a globally recognized leader in the innovation, formulation, production and commercialization of science-based and professionally endorsed products for the health & nutrition industry. The Company focuses primarily on growing segments of the health and nutrition markets which are benefiting from the trends towards healthy living and the ageing of the population. Atrium markets a broad portfolio of finished products through its highly specialized sales and marketing network in more than 35 countries, primarily in North America and Europe. Atrium has over 925 employees and operates eight manufacturing facilities. Additional information about Atrium is available on its website at www.atrium-innovations.com.

Conference Call and Webcast

Atrium will hold its quarterly conference call and webcast to discuss its 2010 first quarter results on Tuesday, May 11, 2010 at 8:00 a.m., Eastern time. Participants may access the call by using the following numbers: 514 807-9895, 888 231-8191 or 647 427-7450. A live webcast is also available via the Company's website at www.atrium-innovations.com in the Investors 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-GAAP Measures

This press release is based on reported earnings in accordance with Canadian generally accepted accounting principles (GAAP). It is also based on earnings before interest, income taxes, depreciation and amortization (EBITDA) and gross margin. These measures do not have a standardized meaning prescribed by GAAP; therefore, other issuers using these terms may calculate them differently. Management believes that a significant portion of the users of its Consolidated Financial Statements and MD&A analyze the Company's results based on these performance measures.

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, necessarily involve risks and uncertainties that could cause actual results to differ materially from those contemplated by these forward-looking statements. The Company considers the assumptions on which these forward-looking statements are based to be reasonable, 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. For additional information with respect to these and other factors, see the Company's quarterly and annual filings with the Canadian securities commissions. 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
             (in millions of US dollars except per share amounts)

    Consolidated results for the quarters ended March 31,
    (unaudited)

                                                2010        2009      Change
                                            ---------   ---------   ---------

    Revenues                                    90.1        70.6        27.5%
                                            ---------   ---------

    Gross profit(1)                             51.6        38.5        34.0%
                                                57.3%       54.5%

    EBITDA(2)                                   21.2        17.7        19.5%
                                                23.5%       25.1%

    Net earnings                                13.0        10.6        22.8%

    Net earnings per share
      Basic                                     0.40        0.33
      Diluted                                   0.39        0.32


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


                           Atrium Innovations Inc.
                         Consolidated Balance Sheets
                   (expressed in thousands of US dollars)
                                 (unaudited)

                                                         As at         As at
                                                      March 31,  December 31,
                                                  ---------------------------

                                                          2010          2009
                                                             $             $
    Assets

    Current assets
    Cash and cash equivalents                           10,522        17,167
    Accounts receivable                                 44,299        45,100
    Income taxes recoverable                             5,767         4,904
    Inventory                                           62,980        58,738
    Prepaid expenses                                     3,663         2,045
    Future income tax assets                               659           741
                                                  ------------- -------------

                                                       127,890       128,695
    Property, plant and equipment                       20,867        17,268
    Deferred charges and others                          2,998         3,050
    Intangible assets                                  211,105       214,304
    Goodwill                                           253,220       262,832
    Future income tax assets                             6,687         7,505
                                                  ------------- -------------
                                                       622,767       633,654
                                                  ------------- -------------
                                                  ------------- -------------

    Liabilities

    Current liabilities
    Accounts payable and accrued liabilities            34,582        43,160
    Purchase price adjustment                                -        22,725
    Income taxes                                           109           272
    Deferred revenues                                    1,589         1,457
                                                  ------------- -------------
                                                        36,280        67,614
    Long-term debt                                     185,212       169,891
    Future income tax liabilities                       56,286        57,536
    Deferred revenues                                      657         1,000
    Derivative financial instruments                     3,315         2,466
                                                  ------------- -------------
                                                       281,750       298,507
                                                  ------------- -------------
    Shareholders' Equity
    Share capital                                       92,356        92,300
    Contributed surplus                                  2,355         2,292
    Retained earnings                                  244,072       231,081
    Accumulated other comprehensive income               2,234         9,474
                                                  ------------- -------------
                                                       341,017       335,147
                                                  ------------- -------------
                                                       622,767       633,654
                                                  ------------- -------------
                                                  ------------- -------------


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

                                                     Quarters Ended March 31,
                                                  ---------------------------

                                                          2010          2009
                                                             $             $

    Revenues                                            90,053        70,603
                                                  ------------- -------------

    Operating expenses
    Cost of sales (including depreciation of
     $509,000; $523,000 in 2009)                        38,456        32,097
    Selling and administrative expenses                 30,358        20,766
    Research and development costs                         558           534
    Depreciation and amortization
      Property, plant and equipment                        309           233
      Intangible assets                                    610           715
                                                  ------------- -------------

                                                        70,291        54,345
                                                  ------------- -------------

    Earnings from operations                            19,762        16,258
                                                  ------------- -------------

    Other revenues (expenses)
    Financial income                                       221           154
    Financial expenses                                  (1,674)       (1,943)
    Foreign exchange loss                                  (45)         (170)
                                                  ------------- -------------

                                                        (1,498)       (1,959)
                                                  ------------- -------------

    Earnings before the following items                 18,264        14,299

    Income tax expense                                   5,273         3,717
                                                  ------------- -------------

    Net earnings of the period                          12,991        10,582
                                                  ------------- -------------
                                                  ------------- -------------

    Net earnings per share
    Basic                                                 0.40          0.33
                                                  ------------- -------------
                                                  ------------- -------------

    Diluted                                               0.39          0.32
                                                  ------------- -------------
                                                  ------------- -------------

    Weighted average number of shares
     outstanding (000's)
    Basic                                               32,667        32,436
                                                  ------------- -------------
                                                  ------------- -------------

    Diluted                                             33,209        32,974
                                                  ------------- -------------
                                                  ------------- -------------


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

                                                     Quarters Ended March 31,
                                                  ---------------------------

                                                          2010          2009
                                                             $             $
    Cash flows from operating activities
    Net earnings of the period                          12,991        10,582

    Items not affecting cash and cash equivalents
      Depreciation and amortization                      1,428         1,471
      Deferred charges                                     177           142
      Deferred revenues                                   (273)         (282)
      Stock-based compensation costs                        71            98
      Future income taxes                                   78          (363)
    Change in non-cash operating working capital
     items                                             (14,863)       (8,001)
                                                  ------------- -------------

    Cash flows from operating activities                  (391)        3,647
                                                  ------------- -------------

    Cash flows from financing activities
    Increase in long-term debt                          24,513        52,826
    Payments on long-term debt                          (1,370)      (53,317)
    Issuance of shares                                      48             -
    Deferred financing costs                               (33)          (10)
                                                  ------------- -------------

    Cash flows from financing activities                23,158          (501)
                                                  ------------- -------------

    Cash flows from investing activities
    Business acquisitions, net of cash and cash
     equivalents acquired                              (27,927)      (18,098)
    Purchase of property, plant and equipment             (796)         (759)
    Acquisition of intangible assets                      (157)         (219)
                                                  ------------- -------------

    Cash flows from investing activities               (28,880)      (19,076)
                                                  ------------- -------------

    Net change of cash and cash equivalents             (6,113)      (15,930)

    Effect of exchange rate changes on cash and
     cash equivalents                                     (532)         (654)
                                                  ------------- -------------

    Decrease in cash and cash equivalents               (6,645)      (16,584)

    Cash and cash equivalents - Beginning of the
     period                                             17,167        38,004
                                                  ------------- -------------

    Cash and cash equivalents - End of the period       10,522        21,420
                                                  ------------- -------------
                                                  ------------- -------------
    

SOURCE Atrium Innovations Inc.

For further information: For further information: Investor Relations: Mario Paradis, Vice President and Chief Financial Officer, (418) 652-1116, mp@atrium-innovations.com; Pierre Boucher, MaisonBrison, (514) 731-0000, ext. 237, pierre@maisonbrison.com; Media Relations: Frédéric Tremblay, Edelman, (514) 844-6665, ext. 231, frederic.tremblay@edelman.com

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