Atrium Innovations Announces Financial Results for the Third Quarter of 2009


    
         Company Delivers Record Quarterly Revenue and Net Earnings

    All amounts are in US dollars.
    
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<p><location>QUEBEC</location> CITY, <chron>Nov. 10</chron> /CNW Telbec/ - Atrium Innovations Inc. (TSX: ATB), a leading developer, manufacturer and marketer of science-based and professionally supported products for the Health and Nutrition industry, today announced its financial results for the third quarter of 2009.</p>
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    Third quarter and recent highlights:

    - Atrium reported record quarterly revenue of $81.4 million;
    - The Company delivered EBITDA of $21.6 million and net earnings of
      $13.1 million, or $0.40 per diluted share;
    - Atrium generated $14 million in cash flows from operations before
      changes in working capital items, supporting a solid balance sheet;
    - Diluted earnings per share increased by 11% and branded organic growth
      was 9% in the quarter as compared to last year, excluding the negative
      impact from the euro conversion of our European businesses into
      US dollars;
    - On September 18, Atrium acquired Garden of Life, a leading formulator,
      distributor and marketer of nutritional supplement products sold in
      nearly 12,000 U.S. health food and specialty retail outlets;
    - Atrium became a member of the Council for Responsible Nutrition, the
      leading trade association committed to advocate for public policy based
      on sound science and consumer access to safe, beneficial, and high
      quality dietary supplement products.
    
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<p/>
<p>During the third quarter ended <chron>September 30, 2009</chron>, Atrium recorded revenues of <money>$81.4 million</money>, a 16% increase compared to adjusted revenues of <money>$70.4 million</money> in the third quarter of 2008. This increase is mainly attributable to the acquisition of Nutri-Health at the end of 2008, AOV during 2008, the recent acquisition of Garden of Life and also to the branded business organic growth. Excluding the negative currency impact on converting the euro of the European business into US dollars as compared the 2008 rates, revenues would have increased by 18%. As expected, the CMO (contract manufacturing) business was softer in the third quarter of 2009 than in the third quarter last year. This was offset by 9% organic growth in the branded business.</p>
<p>Earnings before interest, taxes, depreciation and amortization (EBITDA) for the third quarter of 2009 were <money>$21.6 million</money> compared to <money>$19.0 million</money> for the same period in 2008. Net earnings from continuing operations for the third quarter of 2009 were <money>$13.1 million</money> or <money>$0.40</money> per diluted share, up 8% compared to <money>$12.1 million</money> or <money>$0.37</money> per diluted share in the third quarter of 2008. Excluding the negative currency conversion fluctuations, net earnings from continuing operations would have increased by 11%.</p>
<p>"We continued to execute on our business plan both with our acquisition strategy and organic growth," said <person>Mr. Pierre Fitzgibbon</person>, President and Chief Executive Officer of Atrium Innovations. "We are already recognizing synergies from our acquisitions in terms of revenue expansion opportunities, vertical integration and product development. As we continue to implement a culture of cooperation, I am confident that we will be able to outperform the growth in our market and attract other successful entrepreneurs and their businesses to join the Atrium Group".</p>
<p>For the nine-month period ended <chron>September 30, 2009</chron>, revenues were <money>$224.6 million</money>, up 12% from <money>$201.5 million</money> for the adjusted corresponding period in 2008. Excluding the negative currency fluctuations, revenues would have increased by 17%. EBITDA for the nine-month period ended <chron>September 30, 2009</chron> was <money>$57.8 million</money> compared to <money>$55.5 million</money> for the same period last year. For the nine-month period ended <chron>September 30, 2009</chron>, net earnings from continuing operations were <money>$ 34.9 million</money> or <money>$ 1.06</money> per diluted share compared to <money>$33.3 million</money> or <money>$1.01</money> per diluted share for the same period in 2008. Excluding the negative currency fluctuations, net earnings from continuing operations would have increased by 11%.</p>
<p>For the third quarter of 2009, cash flows from continuing operating activities, before changes in non-cash working capital items, were stable at <money>$14 million</money> compared to <money>$13 million</money> for the corresponding period in 2008. For the nine-month period ended <chron>September 30, 2009</chron>, cash flows from continuing operating activities, before changes in non-cash working capital items, were <money>$37.6 million</money> compared to <money>$36.9 million</money> for the same period in 2008. As at <chron>September 30, 2009</chron>, the Company had a total debt amounting to <money>$181.3 million</money> and a cash balance of <money>$17.8 million</money>. The Company has a credit facility that provides <money>$300 million</money> of borrowing capacity. The credit facility matures only in 2012 and the Company is in compliance with all its financial covenants.</p>
<p>"Even with the investment of <money>$35 million</money> for recent acquisition of Garden of Life, our financial position remains solid, with a net debt of <money>$163.5 million</money> and a ratio of net debt to pro forma EBITDA of slightly less than 2.0," said <person>Mario Paradis</person>, Chief Financial Officer of the Company. "We continued to generate solid free cash flow during the third quarter and we have the financial flexibility to continue growing our business through future acquisitions."</p>
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<p>New Website</p>
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<p>Atrium has recently re-launched its corporate website: <a href="http://www.atrium-innovations.com">www.atrium-innovations.com</a>. The new website provides an overview of Atrium and includes detailed information on all the brands in the Atrium family. The Company intends to use this new website as a way to advance its mission to help create a healthier quality of life, through innovation and scientifically-based nutritional supplements. Atrium's website emphasizes the Company's commitment to its customers' health, its passion for education on the science behind nutritional health and Atrium's vision to grow in health.</p>
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<p>About Atrium</p>
<p/>
<p>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 <location>North America</location> and <location>Europe</location>. Atrium has approximately 900 employees and operates seven manufacturing facilities. Additional information about Atrium is available on its website at <a href="http://www.atrium-innovations.com">www.atrium-innovations.com</a>.</p>
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<p>Conference Call and Webcast</p>
<p/>
<p>Atrium will hold its quarterly conference call and webcast to discuss its 2009 third quarter results on <chron>Wednesday, November 11, 2009</chron> at <chron>10:30 a.m. Eastern time</chron>. Participants may access the call by using the following numbers: 416-644-3416, 514-940-2795 or 800-733-7571. A live webcast is also available via the Company's website at <a href="http://www.atrium-innovations.com">www.atrium-innovations.com</a> 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.</p>
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<p>Caution Regarding Non-GAAP Measures</p>
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<p>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.</p>
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<p>Cautionary Note and Forward-Looking Statements</p>
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<p>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.</p>
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                           Atrium Innovations Inc.
                        Financial Summary (unaudited)
             (in millions of US dollars except per share amounts)

    Consolidated Results for the quarter ended September 30,

                                                2009        2008      Change
                                              --------    --------   --------
    Revenues                                    81.4        75.4
      Inter-co revenues following EAB
       acquisition                                 -         5.0
                                              --------    --------
    Revenues (adjusted in 2008)                 81.4        70.4        15.7%
                                              --------    --------

    Gross Margin(1)                             46.2        37.1        24.3%
                                                56.7%       52.8%

    EBITDA(2)                                   21.6        19.0        13.7%
                                                26.5%       27.0%

    Net earnings from
     continuing operations                      13.1        12.1         8.3%

    Net earnings per share
     from continuing
     operations
      Basic                                     0.40        0.37
      Diluted                                   0.40        0.37



    Consolidated Results for the nine-month period ended September 30,

                                                2009        2008      Change
                                              --------    --------   --------
    Revenues                                   224.6       215.7
      Inter-co revenues following EAB
       acquisition                                 -        14.2
                                              --------    --------
    Revenues (adjusted in 2008)                224.6       201.5        11.5%
                                              --------    --------

    Gross Margin(1)                            124.2       109.9        13.1%
                                                55.3%       54.5%

    EBITDA(2)                                   57.8        55.5         4.1%
                                                25.7%       27.6%

    Net earnings from continuing operations     34.9        33.3         4.7%

    Net earnings per share from continuing
     operations
      Basic                                     1.07        1.03
      Diluted                                   1.06        1.01


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


    Atrium Innovations Inc.
    Interim Consolidated Balance Sheets
    (expressed in thousands of US DOLLARS)
                                                         As at         As at
                                                  September 30,  December 31,
    Unaudited                                             2009          2008
    -------------------------------------------------------------------------
                                                  ---------------------------
                                                             $             $
    Assets
    Current assets
    Cash and cash equivalents                           17,829        38,004
    Accounts receivable                                 43,132        42,577
    Income tax recoverable                               1,902         2,143
    Inventory                                           56,202        45,851
    Prepaid expenses                                     3,368         2,200
    Current receivable                                       -         9,115
    Future income tax assets                               486           615
                                                  ---------------------------
                                                       122,919       140,505

    Property, plant and equipment                       17,514        15,593
    Deferred charges and others                          3,099         2,019
    Financial instruments                                    -            94
    Intangible assets                                  219,167       186,192
    Goodwill                                           240,576       209,379
    Future income tax assets                             8,561         4,858
                                                  ---------------------------
                                                       611,836       558,640
                                                  ---------------------------
                                                  ---------------------------

    Liabilities
    Current liabilities
    Accounts payable and accrued liabilities            42,473        36,589
    Income taxes                                           796           134
    Deferred revenues                                    1,454         1,266
    Current portion of long-term debt                        -             6
                                                  ---------------------------
                                                        44,723        37,995

    Long-term debt                                     181,290       179,965
    Deferred revenues                                    1,317         2,042
    Financial instruments                                2,475             -
    Future income tax liabilities                       58,454        56,609
                                                  ---------------------------
                                                       288,259       276,611
                                                  ---------------------------
    Shareholders' Equity
    Share capital                                       92,256        89,756
    Contributed surplus                                  2,220         1,940
    Retained earnings                                  217,262       182,411
    Accumulated other comprehensive income              11,839         7,922
                                                  ---------------------------
                                                       323,577       282,029
                                                  ---------------------------
                                                       611,836       558,640
                                                  ---------------------------
                                                  ---------------------------


    Atrium Innovations Inc.
    Interim Consolidated Statements of Earnings
    (expressed in thousands of US DOLLARS, except share and per share data)

                                      Quarters ended       Nine months ended
                                        September 30,           September 30,
                                  --------------------    -------------------
    Unaudited                       2009        2008        2009        2008
    -------------------------------------------------------------------------
                                  -------------------------------------------
                                       $           $           $           $


    Revenues                      81,393      75,421     224,626     215,739
    -------------------------------------------------------------------------
    Operating expenses
    Cost of sales                 35,241      38,286     100,391     105,884
    Selling and administrative
     expenses                     24,735      18,378      66,696      54,785
    Research and development
     costs                           525         278       1,531         886
    Depreciation and
     amortization
      Property, plant and
       equipement                    364         249         814         725
      Intangible assets              757         746       2,205       2,202
    -------------------------------------------------------------------------
                                  61,622      57,937     171,637     164,482
    -------------------------------------------------------------------------
    Earnings from operations      19,771      17,484      52,989      51,257
    -------------------------------------------------------------------------

    Other revenues (expenses)
    Financial revenues                29         269         224       1,772
    Financial expenses            (1,765)     (2,088)     (5,522)    (10,432)
    Foreign exchange gain (loss)    (127)        744        (552)      1,838
    -------------------------------------------------------------------------
                                  (1,863)     (1,075)     (5,850)     (6,822)
    -------------------------------------------------------------------------
    Earnings before the
     following items              17,908      16,409      47,139      44,435

    Income tax expense
      Current income tax
       expense                     5,352       4,546      13,891      12,031
      Future income tax benefit     (515)       (205)     (1,603)       (880)
    -------------------------------------------------------------------------
                                   4,837       4,341      12,288      11,151
    -------------------------------------------------------------------------

    Net earnings from continuing
     operations                   13,071      12,068      34,851      33,284

    Net earnings from
     discontinued operations           -           -           -      37,361
    -------------------------------------------------------------------------
    Net earnings for the period   13,071      12,068      34,851      70,645
    -------------------------------------------------------------------------
                                  -------------------------------------------

    Net earnings per share from
     continuing operations
    Basic                           0.40        0.37        1.07        1.03
    Diluted                         0.40        0.37        1.06        1.01

    Net earnings per share
    Basic                           0.40        0.37        1.07        2.18
    Diluted                         0.40        0.37        1.06        2.14

    Weighted average number
     of shares outstanding
     (000's)
    Basic                         32,504      32,407      32,459      32,344
    Diluted                       33,023      32,972      32,986      33,039


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

                                      Quarters ended       Nine months ended
                                        September 30,           September 30,
                                  --------------------    -------------------
    Unaudited                       2009        2008        2009        2008
    -------------------------------------------------------------------------
                                  -------------------------------------------
                                       $           $           $           $
    Cash flows from operating
     activities
    Net earnings for the period   13,071      12,068      34,851      70,645
    Net earnings for the period
     from discontinued
     operations                        -           -           -     (37,361)
    -------------------------------------------------------------------------
    Net earnings for the period
     from continuing operations   13,071      12,068      34,851      33,284
    -------------------------------------------------------------------------
    Items not affecting cash
     and cash equivalents
      Depreciation and
       amortization                1,792       1,488       4,815       4,290
      Deferred charges               159         134         443         696
      Deferred revenues             (566)       (450)     (1,148)       (245)
      Gain on derivative
       financial instruments           -         (40)          -        (810)
      Stock-based compensation
       costs                          74         138         280         544
      Future income taxes           (515)       (205)     (1,603)       (880)
    Foreign exchange gain on
     long-term items denominated
     in foreign currency               -        (163)          -         (12)
    Change in non-cash operating
     working capital items         6,252      (1,437)      3,712     (29,156)
    -------------------------------------------------------------------------
      Cash flows from continuing
       operating activities       20,267      11,533      41,350       7,711
      Cash flows from
       discontinued operating
       activities                      -           -           -      13,270
    -------------------------------------------------------------------------
      Cash flows from operating
       activities                 20,267      11,533      41,350      20,981
    -------------------------------------------------------------------------

    Cash flows from financing
     activities
    Increase in long-term debt    23,803      11,388      77,384      35,080
    Payments on long-term debt    (8,029)     (3,945)    (85,756)   (183,769)
    Deferred financing costs         (46)        (56)       (209)       (916)
    Issuance of shares, net of
     share issue expenses and
     related income tax                -           -           -       4,748
    Proceeds from the sale of
     derivative financial
     instruments                       -           -           -         755
    -------------------------------------------------------------------------
    Cash flows from continuing
     financing activities         15,728       7,387      (8,581)   (144,102)
    -------------------------------------------------------------------------

    Cash flows from investing
     activities
    Business acquisitions,
     net of cash and cash
     equivalents acquired        (34,513)    (10,332)    (51,420)    (34,471)
    Purchase of property,
     plant and equipment            (630)     (1,005)     (2,425)     (2,320)
    Acquisition of intangible
     assets                          (31)         (5)       (324)        (53)
    -------------------------------------------------------------------------
    Cash flows from continuing
     investing activities        (35,174)    (11,342)    (54,169)    (36,844)
    Cash flows from discontinued
     investing activities              -           -           -     142,690
    -------------------------------------------------------------------------
    Cash flows from investing
     activities                  (35,174)    (11,342)    (54,169)    105,846
    -------------------------------------------------------------------------

    Net change in cash and
     cash equivalent                 821       7,578     (21,400)    (17,275)
    Effect of exchange rate
     changes on cash and cash
     equivalents                     827      (1,760)      1,225      (1,755)
    -------------------------------------------------------------------------

    Increase (decrease) in
     cash and cash equivalents     1,648       5,818     (20,175)    (19,030)
    Cash and cash equivalents -
     beginning balance            16,181      20,005      38,004      44,853
    -------------------------------------------------------------------------
    Cash and cash equivalents -
     ending balance               17,829      25,823      17,829      25,823
    -------------------------------------------------------------------------
                                  -------------------------------------------


    To view Atrium Innovations Inc. Waterfall Summary charts please click
    here: http://files.newswire.ca/815/Atrium-ENG.pdf
    

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

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