Atrium Innovations Announces Second Quarter Financial Results of 2010

Sustained Growth and Solid Momentum of Branded Products

QUEBEC CITY, Aug. 12 /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 second quarter of 2010.

    
    Second Quarter Highlights:
    (All amounts are in US dollars.)

    - Revenue and EBITDA growth of 17.3% and 9.6%
    - EBITDA of $20.3 million or 23.8% of revenues
    - Net earnings of $12.5 million up 11.4%
    - EPS diluted of $0.38, up from $0.34 last year
    

"The acquisitions of Garden of Life and Trophic Canada combined with growth of branded products of 9.7%, excluding Germany, were the main contributors to revenue growth," said Pierre Fitzgibbon, President & CEO. "During the quarter, we successfully completed the integration of Trophic and started to leverage our Canadian distribution channel with health food and specialized stores.

"Sales of the Wobenzym family of products in Germany remained challenging during the quarter. However, the situation improved in the latter part of the quarter with the introduction of two new complementary products. Early into the third quarter, we are satisfied by sales progress of Wobenzym products and the run rate of the new products introduced.

"Industry fundamentals remain solid and we continue to assess multiple opportunities for acquisitions. For the third quarter, we expect moderate sequential revenue growth over the second quarter reflecting some seasonality," concluded Mr. Fitzgibbon

For the second quarter ended June 30, 2010, Atrium recorded revenues of $85.2 million representing an increase of 17.3% compared to revenues of $72,6 million for the corresponding period in 2009. The increase is mainly attributable to the acquisitions of Garden of Life and Trophic. Excluding the negative impact of the euro/US dollar exchange rate when compared to the corresponding period last year, revenues would have increased by 19.6%.

Gross profit for the second quarter was $48.9 million compared to $39.6 million for 2009, an increase of $9.3 million or 23.4%. The increase in gross profit is primarily attributable to the acquisitions of Garden of Life and Trophic. For the second 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 facility.

EBITDA (earnings before interest, taxes, depreciation and amortization) for the second quarter of 2010 increased by 9.6% to $20.3 million or 23.8% of revenues compared to $18.5 million or 25.5% of revenues for the same period in 2009. This EBITDA increase came primarily from a higher gross profit partially offset by the increase of SG&A expenses related to new distribution channels requiring higher levels of sales & marketing expenses. Excluding the impact of the euro/US dollar exchange rate, EBITDA would have increased by 12.5%.

Net earnings for the quarter were $12.5 million compared to $11.2 million in 2009, representing an increase of 11.4%. EPS for the quarter were $0.38 per diluted share compared to $0.34 per diluted share in 2009.

Cash flows from operating activities before changes in non-cash working capital items were $13.8 million in 2010, an increase of 15.6% compared to $12.0 million in 2009. As at June 30, 2010, the Company had a total debt of $161.7 million and a cash position of $11.0 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 seven 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 second quarter results on Friday, August 13, 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 (unaudited)
             (in millions of US dollars except per share amounts)

    Consolidated results for the quarters ended June 30,

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

    Revenues                                        85.2      72.6      17.3%
                                                 --------  --------

    Gross profit(1)                                 48.9      39.6      23.4%
                                                    57.3%     54.5%

    EBITDA(2)                                       20.3      18.5       9.6%
                                                    23.8%     25.5%

    Net earnings                                    12.5      11.2      11.4%

    Net earnings per share
      Basic                                         0.38      0.35
      Diluted                                       0.38      0.34      11.8%


    Consolidated results for the six-month period ended June 30,

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

    Revenues                                       175.2     143.2      22.3%
                                                 --------  --------

    Gross profit(1)                                100.4      78.1      28.6%
                                                    57.3%     54.5%

    EBITDA(2)                                       41.5      36.2      14.4%
                                                    23.7%     25.3%

    Net earnings                                    25.5      21.8      16.9%

    Net earnings per share
      Basic                                         0.78      0.67
      Diluted                                       0.77      0.66      16.7%

    (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
                                                       June 30,  December 31,
                                                   ------------  ------------
                                                          2010          2009
                                                             $             $
    Assets

    Current assets
    Cash and cash equivalents                           10,996        17,167
    Accounts receivable                                 43,703        45,100
    Income taxes recoverable                             3,244         4,904
    Inventory                                           63,789        58,738
    Prepaid expenses                                     3,312         2,045
    Future income tax assets                               669           741
                                                   ------------  ------------

                                                       125,713       128,695

    Property, plant and equipment                       19,710        17,268
    Deferred charges and others                          3,136         3,050
    Intangible assets                                  200,183       214,304
    Goodwill                                           241,053       262,832
    Future income tax assets                             5,667         7,505
                                                   ------------  ------------
                                                       595,462       633,654
                                                   ------------  ------------
                                                   ------------  ------------
    Liabilities

    Current liabilities
    Accounts payable and accrued liabilities            32,639        43,160
    Purchase price adjustment                                -        22,725
    Income taxes                                           133           272
    Deferred revenues                                    1,550         1,457
                                                   ------------  ------------

                                                        34,322        67,614

    Long-term debt                                     161,670       169,891
    Future income tax liabilities                       56,890        57,536
    Deferred revenues                                      266         1,000
    Derivative financial instruments                     2,964         2,466
                                                   ------------  ------------
                                                       256,112       298,507
                                                   ------------  ------------
    Shareholders' Equity
    Share capital                                       92,356        92,300
    Contributed surplus                                  2,429         2,292
    Retained earnings                                  256,549       231,081
    Accumulated other comprehensive income             (11,984)        9,474
                                                   ------------  ------------
                                                       339,350       335,147
                                                   ------------  ------------
                                                       595,462       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     Six months ended
                                             June 30,            June 30,
                                       ------------------  ------------------
                                          2010      2009      2010      2009
                                             $         $         $         $

    Revenues                            85,183    72,630   175,236   143,233

    Operating expenses
    Cost of sales                       36,332    33,053    74,788    65,150
    Selling and administrative
     expenses                           28,669    21,195    59,027    41,961
    Research and development costs         505       472     1,063     1,006
    Depreciation and amortization
      Property, plant and equipment        488       217       797       450
      Intangible assets                    668       733     1,278     1,448
                                       --------  --------  --------  --------

                                        66,662    55,670   136,953   110,015
                                       --------  --------  --------  --------

    Earnings from operations            18,521    16,960    38,283    33,218
                                       --------  --------  --------  --------

    Other revenues (expenses)
    Financial income                        40        41       261       195
    Financial expenses                  (1,683)   (1,814)   (3,357)   (3,757)
    Foreign exchange gain (loss)           704      (255)      659      (425)
                                       --------  --------  --------  --------

                                          (939)   (2,028)   (2,437)   (3,987)
                                       --------  --------  --------  --------

    Earnings before the following
     items                              17,582    14,932    35,846    29,231

    Income tax expense                   5,105     3,734    10,378     7,451
                                       --------  --------  --------  --------


    Net earnings of the period          12,477    11,198    25,468    21,780
                                       --------  --------  --------  --------
                                       --------  --------  --------  --------

    Net earnings per share
    Basic                                 0.38      0.35      0.78      0.67
                                       --------  --------  --------  --------
                                       --------  --------  --------  --------

    Diluted                               0.38      0.34      0.77      0.66
                                       --------  --------  --------  --------
                                       --------  --------  --------  --------

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

    Diluted                             33,197    32,960    33,203    32,967
                                       --------  --------  --------  --------
                                       --------  --------  --------  --------


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

                                         Quarters Ended     Six months ended
                                             June 30,            June 30,
                                       --------  --------  --------  --------
                                          2010      2009      2010      2009
                                             $         $         $         $
    Cash flows from operating
     activities
    Net earnings of the period          12,477    11,198    25,468    21,780

    Items not affecting cash and cash
     equivalents
      Depreciation and amortization      1,761     1,552     3,189     3,023
      Deferred charges                    (247)      142       (70)      284
      Deferred revenues                   (346)     (300)     (619)     (582)
      Stock-based compensation costs        74       108       145       206
      Future income taxes                  123      (725)      201    (1,088)
    Change in non-cash operating
     working capital items              (4,617)    5,461   (19,480)   (2,540)
                                       --------  --------  --------  --------

    Cash flows from operating
     activities                          9,225    17,436     8,834    21,083
                                       --------  --------  --------  --------

    Cash flows from financing
     activities
    Increase in long-term debt           1,434       755    25,947    53,581
    Payments on long-term debt          (8,188)  (24,410)   (9,558)  (77,727)
    Deferred financing costs               (36)     (153)      (69)     (163)
    Issuance of shares                       -         -        48         -
                                       --------  --------  --------  --------

    Cash flows from financing
     activities                         (6,790)  (23,808)   16,368   (24,309)
                                       --------  --------  --------  --------

    Cash flows from investing
     activities
    Business acquisitions, net
     of cash and cash equivalents
     acquired                             (341)    1,191   (28,268)  (16,907)
    Purchase of property, plant
     and equipment                        (885)   (1,036)   (1,681)   (1,795)
    Acquisition of intangible
     assets                                (94)      (74)     (251)     (293)
                                       --------  --------  --------  --------

    Cash flows from investing
     activities                         (1,320)       81   (30,200)  (18,995)
                                       --------  --------  --------  --------

    Net change of cash and cash
     equivalents                         1,115    (6,291)   (4,998)  (22,221)

    Effect of exchange rate
     changes on cash and cash
     equivalents                          (641)    1,052    (1,173)      398
                                       --------  --------  --------  --------

    Decrease (increase) in cash
     and cash equivalents                  474    (5,239)   (6,171)  (21,823)

    Cash and cash equivalents -
     Beginning of the period            10,522    21,420    17,167    38,004
                                       --------  --------  --------  --------

    Cash and cash equivalents -
     End of the period                  10,996    16,181    10,996    16,181
                                       --------  --------  --------  --------
                                       --------  --------  --------  --------
    

SOURCE Atrium Innovations Inc.

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

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