Atrium Innovations Announces 2010 Full-Year Financial Results and Executive Management Appointments

Solid Performance of North American Branded Business in 2010

QUEBEC CITY, Feb. 28 /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 2010 fourth quarter and full-year financial results for the period ended December 31, 2010.

2010 Highlights:
(All amounts are in US dollars.)

  • Revenue growth of 11.6% over previous year to reach $356.6 million
  • North American branded business posted 9.5% growth in 2010
  • Sales in Germany troughed in Q2 and improved sequentially in Q3 and Q4
  • EBITDA of $83.9 million or 23.5% of revenues and diluted EPS of $1.55 for the year
  • Completion of three strategic acquisitions: Trophic, Minami, and Seroyal representing an investment of over $130 million

"We are pleased by our performance in 2010 as our North American business did very well, particularly our branded business which expanded by 9.5%, above forecasted industry growth and in line with our expectations. On the other hand, our European business was more of a challenge with basically flat industry growth rates in Germany and Holland. While we experienced product transition issues in Germany during the year which caused significant sales decline, we quickly made adjustments to our strategy and consequently revenues progressively improved over the past two quarters, providing us with the confidence that we are rebuilding our base in Germany," said Pierre Fitzgibbon, President and CEO.

"Fourth quarter revenues and EBITDA were in line with our expectations and guidance.  Factors that negatively impacted year-over-year comparisons included unfavourable exchange rates, lower sales in Germany, the introduction and ramp-up of new products at a large client of Garden of Life in 2009, and soft sales in the volatile direct to consumer segment. The latter two factors impacted the North American branded business, which in aggregate grew by 2.0% over last year. 

"The acquisitions of Minami and Seroyal announced in December 2010, sound industry fundamentals and cross-selling opportunities should fuel healthy growth rates for Atrium in 2011 and beyond.

"We remain focused on optimizing operational synergies while we maintain an ambitious growth plan. The Company has reached a size that creates and attracts more opportunities, an important element as the evolution of our industry favours economies of scale. Atrium has grown on an entrepreneurial basis over the years.  Now, as part of normal business evolution, we need to address and take advantage of synergistic and shared functions, which resulted in our new organizational and management structure. We aim to optimize our core synergies in terms of products, markets and operations over the next 24 months, a period during which we expect significant and favourable changes in the industry," concluded Mr. Fitzgibbon.

For the fiscal year ended December 31, 2010, Atrium recorded revenues of $356.6 million representing an increase of 11.6% compared to revenues of $319.7 million in 2009. This increase is mainly attributable to the acquisitions of Trophic and Garden of Life as well as to organic growth of North American branded business, partly offset by a decrease in sales in Germany as well as adverse exchange rates. Excluding the impact on European operations of unfavourable exchange rates between the euro and the US dollar, revenue would have been higher by $5.8 million or 13.4% when compared to 2009.

EBITDA increased by 3.9% to $83.9 million or 23.5% of revenues compared to $80.8 million or 25.3% of revenues for the same period in 2009. Without the negative impact of the euro/US dollar exchange rate, EBITDA would have increased by 5.7% to $85.3 million

Net earnings were $51.6 million in 2010 compared to $48.7 million in 2009, representing an increase of 6.0%. Net earnings per share ("EPS") on a diluted basis rose to $1.55 per share, as compared to $1.47 per share for the same period in 2009.

Cash flows from operating activities before changes in non-cash working capital items were $59.3 million, an increase of 10.1% compared to $53.9 million in 2009. As at December 31, 2010, the Company had a total debt of $275.8 million and a cash position of $12 million. The Company has a revolving credit facility that provides $300 million of borrowing capacity, of which approximately $40 million is available.

Financial Results for the Fourth Quarter of 2010

For the fourth quarter ended December 31, 2010, Atrium recorded revenues of $92.5 million representing a decrease of 2.6% compared to $95.0 million for the corresponding period in 2009. The decrease is mainly attributable to the negative impact of the euro/US dollar exchange rate when compared to the corresponding period last year representing $3.0 million, the lower sales in Germany, the launch of new products at a large client of Garden of Life last year, and softer sales in the direct to consumer market.

EBITDA for the fourth quarter of 2010 was $21.2 million or 22.9% of revenue compared to $23.0 million or 24.2% of revenues for the same period in 2009. Net earnings were $13.4 million in 2010 compared to $13.8 million in 2009, representing a decrease of 3.3%. EPS for the quarter were $0.40 per diluted share compared $0.42 per diluted share in 2009.

Cash flows from operating activities before changes in non-cash working capital items were $15.1 million in 2010 compared to $16.2 million in 2009.

New Organizational and Management Structure

Effective February 28, Carmen Fortino is appointed as President of Atrium North American operations reporting directly to Pierre Fitzgibbon. He previously held the position of Chief Executive Officer of Seroyal International Inc., acquired by Atrium in December 2010.  Mr. Fortino's role will be to build on a strong brand position within the North American operations, focusing on creating and optimizing various market opportunities, while leveraging operating systems to provide best in class products and services to our clients.  Mr. Fortino brings his strong entrepreneurial talents from Seroyal, and a highly successful family owned business that was sold to Canada's largest food retailer.  He is a seasoned executive with extensive high-level experience leading multi-brand, multi-channel environments augmented by a solid background in supply chain, logistics and financial reporting.    

Also reporting to Pierre Fitzgibbon and effective immediately, Serge Yelle will become Executive Vice-President of Strategy and Business Development.  He will also serve as interim President of the European Operations. In his new role, Mr. Yelle will focus on the strategic direction, business development and Science, Innovation, and Education aspects of Atrium as a whole. Mr. Yelle's objective, similar to Mr. Fortino's role in North America, will be to address and promote various operational synergies in Europe and within the context of the Group.

About Atrium

Atrium Innovations Inc. is a globally recognized leader in the development, manufacturing, and commercialization of innovative, science-based dietary supplements 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

Conference Call and Webcast

Atrium will hold its quarterly conference call and webcast to discuss its 2010 fourth quarter and annual results on Tuesday March 1st, 2011 at 8:30 a.m., Eastern Time. Participants may access the call by using the following numbers: 514 807-8791, 800-731-5319 or 416-644-3426. A live webcast is also available via the Company's website at 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-GAAP Financial Measures

The Company provides non-GAAP financial measures (gross profit*, EBIT*, and EBITDA*) as supplemental information regarding its operational performance. These non-GAAP 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 GAAP 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 GAAP. 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 GAAP.

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

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.

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 year ended December 31,
Revenues 356.6   319.7   11.6%
Gross profit (1) 203.0   179.3   13.3%
  56.9%   56.1%    
EBITDA (2) 83.9   80.8   3.9%
  23.5%   25.3%    
Net earnings 51.6   48.7   6.0%
Net earnings per share          
  Basic 1.58   1.50    
  Diluted 1.55   1.47    
Consolidated results for the quarter ended December 31,
Revenues 92.5   95.0   -2.6%
Gross profit (1) 53.4   55.0   -2.9%
  57.8%   57.9%    
EBITDA (2) 21.2   23.0   -7.6%
  22.9%   24.2%    
Net earnings 13.4   13.8   -3.3%
Net earnings per share          
  Basic 0.41   0.42    
  Diluted 0.40   0.42    

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

Atrium Innovations Inc.
Consolidated Balance Sheets
(expressed in thousands of US dollars)
    As at December 31,
Current assets        
Cash   12,049   17,167
Accounts receivable   50,070   45,100
Income taxes recoverable   5,018   4,904
Inventory   79,243   58,738
Prepaid expenses   4,384   2,045
Future income tax assets   733   741
    151,497   128,695
Property, plant and equipment   21,916   17,268
Deferred charges and others   3,238   3,050
Intangible assets   251,939   214,304
Goodwill   353,379   262,832
Future income tax assets   6,502   7,505
    788,471   633,654
Current liabilities        
Accounts payable and accrued liabilities   56,890   43,160
Purchase price adjustment   -   22,725
Income taxes   1,148   272
Deferred revenues   944   1,457
Current portion of long-term debt   217   -
    59,199   67,614
Long-term debt   275,614   169,891
Future income tax liabilities   68,736   57,536
Deferred revenues   218   1,000
Derivative financial instruments   2,256   2,466
Non-controlling interest   180   -
    406,203   298,507
Shareholders' Equity        
Share capital   92,664   92,300
Contributed surplus   2,517   2,292
Retained earnings   282,692   231,081
Accumulated other comprehensive income   4,395   9,474
    382,268   335,147
    788,471   633,654

Atrium Innovations Inc.
Consolidated Statements of Earnings
(tabular amounts in thousands of US dollars, except share and per share data)
ended December 31,
Revenues   356,630   319,655
Operating expenses        
Cost of sales   153,602   140,405
Selling and administrative expenses   119,577   98,427
Research and development costs   2,021   2,330
Depreciation and amortization        
  Property, plant and equipment   1,637   1,265
  Intangible assets   2,673   2,965
    279,510   245,392
Earnings from operations   77,120   74,263
Other revenues (expenses)        
Financial income   451   298
Financial expenses   (6,922)   (7,370)
Foreign exchange gain (loss)   331   (286)
    (6,140)   (7,358)
Earnings before the following items   70,980   66,905
Income tax expense   19,369   18,235
Net earnings of the year   51,611   48,670
Net earnings per share        
Basic   1.58   1.50
Diluted   1.55   1.47
Weighted average number of shares outstanding (000's)        
Basic   32,699   33,508
Diluted   33,208   33,038

Atrium Innovations Inc.
Consolidated Statements of Cash Flows
(expressed in thousands of US dollars)
  Years ended December 31,
Cash flows from operating activities      
Net earnings of the year 51,611   48,670
Items not affecting cash and cash equivalents      
  Depreciation and amortization 6,782   6,496
  Deferred charges 329   616
  Deferred revenues (1,367)   (1,509)
  Stock-based compensation costs 233   352
  Future income taxes 1,707   (759)
Change in non-cash operating working capital items (23,425)   (2,542)
Cash flows from operating activities 35,870   51,324
Cash flows from financing activities      
Increase in long-term debt 139,936   78,448
Payments on long-term debt (24,124)   (94,660)
Deferred financing costs (370)   (342)
Issuance of shares 356   44
Cash flows from financing activities 115,798   (16,510)
Cash flows from investing activities      
Business acquisitions, net of cash and cash equivalents acquired (148,123)   (52,813)
Purchase of property, plant and equipment (3,976)   (3,365)
Acquisition of intangible assets (3,785)   (493)
Cash flows from investing activities (155,884)   (56,671)
Net change of cash (4,216)   (21,857)
Effect of exchange rate changes on cash (902)   1,020
Decrease in cash (5,118)   (20,837)
Cash - Beginning of year 17,167   38,004
Cash - End of year 12,049   17,167


For further information:

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

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