2014

Atrium Innovations Announces 2011 Second Quarter Financial Results

Strong Contribution from Acquisitions coupled
with Solid Organic Growth

QUEBEC CITY, Aug. 10, 2011 /PRNewswire/ - 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 second quarter results for the period ended June 30, 2011.

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

  • Revenue growth of 23.5% over previous year to reach $105.2 million
  • Strong contribution of Seroyal acquisition with integration substantially completed
  • Branded organic growth reached 6.0%
  • EBITDA of $23.8 million or 22.6% of revenues, an increase of 17.2% compared to last year
  • Diluted EPS of $0.44 for the quarter
  • Cash flow before working capital was up 24.3% to $18.9 million.
  • Subsequent to quarter-end, closing a CAN$100 million of convertible debentures

"We are pleased with our second quarter results. We substantially completed the integration of Seroyal, and the new North American management structure implemented a few months ago is beginning to provide tangible benefits to support our next growth phase," said Pierre Fitzgibbon, President and Chief Executive Officer.

"We experienced strong revenue growth from acquisitions, as well as solid global organic growth for a second consecutive quarter from our branded products. Moreover, we increased our EBITDA margin compared to the first quarter of 2011, and we should expect further improvements going forward with the various initiatives underway in our global supply chain management program".

"We are confident in our ability to out-perform the industry since we have started several new organic growth initiatives," concluded Mr. Fitzgibbon.

For the quarter ended June 30, 2011, Atrium recorded revenues of $105.2 million representing an increase of 23.5% compared to revenues of $85.2 million in 2010. This increase is mainly attributable to the acquisitions of Seroyal and Minami as well as to organic growth of the Company's branded business.

EBITDA increased by 17.2% to $23.8 million or 22.6% of revenues compared to $20.3 million or 23.8% of revenues for the same period in 2010. The acquisitions of Seroyal and Minami and organic growth contributed to the increase in EBITDA.

Net earnings attributable to shareholders were $14.4 million in 2011 compared to $12.4 million in 2010, representing an increase of 16.1%. Net earnings per share ("EPS") on a diluted basis rose to $0.44 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 $18.9 million compared to $15.2 million in 2010. As at June 30, 2011, the Company had a total debt of $306.7 million and a cash position of $15.0 million. Subsequent to quarter-end, the Company announced yesterday the closing of a convertible debenture public offering of CAN$75 million and a concurrent private placement of CAN$25 million. The net proceeds will be used to reduce the Company's outstanding indebtedness.

"Cash flow before working capital of $18.9 million during the quarter increased 24.3% over the same period last year confirming our ability to generate strong cash flows," said Mario Paradis, Chief Financial Officer of the Company. "Since the beginning of 2011, we acquired over 200,000 shares under our normal course issuer bid program and we will continue to act on our program depending on the circumstances. We also are pleased with our recently completed $100 million convertible debenture deal. It represents an important milestone to manage our capital structure and further support our growth strategy," concluded Mr. Paradis.

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 second quarter results on Thursday August 11, 2011 at 8:30 a.m., Eastern Time. Participants may access the call by using the following numbers: 514-807-8791, 877-974-0445, or 416-644-3423. 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 June 30,
(unaudited)

  2011
$
  2010
$
  Change
           
Revenues 105.2   85.2   23%
           
Gross profit (1) 54.9   48.9    
  52.2%   57.4%    
           
EBITDA (2) 23.8   20.3   17%
  22.6%   23.8%    
           
Net earnings attributable to shareholders 14.4   12.4   17%
           
Net earnings per share          
  Basic 0.44   0.38    
  Diluted 0.44   0.37    
             
Reconciliation to non IFRS Financial Data          
             
Net earnings attributable to shareholders
14.4
  12.4
   
  Acquisition-related costs and interest expenses
for acquisition-related contingent liabilities
(after-tax)
-   0.1    
Net earnings 14.4   12.5    
             
Net diluted earnings per share 0.44   0.38    

(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.
Financial Summary (unaudited)
(in millions of US dollars except per share amounts)

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

  2011
$
  2010
$
  Change
           
Revenues 212.9   175.2   22%
           
Gross profit (1) 115.7   100.4    
  54.3%   57.3%    
           
EBITDA (2) 47.2   41.5   14%
  22.2%   23.7%    
           
Net earnings attributable to shareholders 28.6   24.8   15%
           
Net earnings per share          
  Basic 0.87   0.76    
  Diluted 0.86   0.75    
  
Reconciliation to non IFRS Financial Data          
Net earnings attributable to shareholders 28.6   24.8    
  Acquisition-related costs and interest expenses
for acquisition-related contingent liabilities
(after-tax)
0.1   0.7    
Net earnings 28.7   25.5    
Net diluted earnings per share 0.86   0.77    

(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 June 30,   As at December 31,
  2011
$
  2010
$
Assets      
       
Current assets      
Cash 15,043   12,049
Accounts receivable 55,025   50,070
Income taxes recoverable 6,342   5,018
Inventory 84,117   79,243
Prepaid expenses 5,411   4,384
       
  165,938   150,764
Property, plant and equipment 22,219   21,916
Deferred charges and others 3,627   3,238
Intangible assets 267,745   251,939
Goodwill 375,876   360,963
Deferred tax assets 5,155   8,564
  840,560   797,384
Liabilities      
       
Current liabilities      
Accounts payable and accrued liabilities 39,181   38,564
Provisions 2,106   3,351
Contingent considerations 15,194   17,583
Income taxes 598   1,148
Deferred revenues 344   944
Derivative financial instruments 959   -
Current portion of long-term debt 291   217
  58,673   61,807
Long-term debt 306,429   275,614
Deferred tax liabilities 69,278   68,970
Contingent considerations -   11,877
Deferred revenues 152   218
Derivative financial instruments -   2,256
       
  434,532   420,742
Shareholders' Equity      
Share capital 92,466   92,664
Stock options reserve 2,028   1,767
Retained earnings 314,490   288,607
Accumulated other comprehensive income (3,679)   (6,576)
  405,305   376,462
Non-controlling interest 723   180
  406,028   376,642
  840,560   797,384

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


  Quarters ended June 30,   Six months ended June 30,
  2011
$
  2010
$
  2011
$
  2010
$
               
Revenues 105,161   85,183   212,913   175,236
               
Operating expenses              
Cost of sales 50,272   36,332   97,227   74,788
Selling and administrative expenses 32,185   29,825   70,780   61,733
Research and development costs 566   505   1,135   1,063
               
  83,023   66,662   169,142   137,584
               
Earnings from operations 22,138   18,521   43,771   37,652
               
Other revenues (expenses)              
Financial revenues 69   40   115   261
Financial expenses (2,744)   (1,773)   (4,743)   (3,537)
Foreign exchange gain (loss) (45)   704   (242)   659
               
  (2,720)   (1,029)   (4,870)   (2,617)
               
Earnings before the following items 19,418   17,492   38,901   35,035
               
Income tax expense 4,728   5,131   9,797   10,244
               
               
Net earnings for the period 14,690   12,361   29,104   24,791
               
Net earnings for the period attributable to              
Shareholders 14,446   12,361   28,561   24,791
Non-controlling interest 244   -   543   -
               
Net earnings per share              
Basic 0.44   0.38   0.87   0.76
Diluted 0.44   0.37   0.86   0.75
               
Weighted average number of shares
outstanding (000's)
             
Basic 32,723   32,667   32,749   32,667
Diluted 33,107   33,197   33,157   33,203

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

  Quarters ended June 30,   Six months ended June 30,
               
  2011
$
  2010
$
  2011
$
  2010
$
Cash flows from operating activities              
Net earnings for the period 14,690   12,361   29,104   24,791
               
Adjustments for:              
  Depreciation and amortization 1,647   1,761   3,385   3,189
  Deferred charges 212   (247)   259   (70)
  Deferred revenues (379)   (346)   (698)   (619)
  Stock-based compensation costs 199   74   288   145
  Interest expense 2,447   1,487   4,058   2,963
  Deferred income taxes 71   149   1,340   67
  Change in non-cash operating working capital items 1,748   (4,865)   (11,607)   (19,695)
               
Cash flows from operating activities 20,635   10,374   26,129   10,771
               
Cash flows from financing activities              
Increase in long-term debt 187   1,434   232,898   25,947
Payments on long-term debt (12,699)   (8,188)   (225,602)   (9,558)
Deferred financing costs (239)   (36)   (428)   (69)
Issuance of shares 159   -   347   48
Redeemed and cancelled under a normal course issuer bid (1,661)   -   (3,250)   -
Interest paid (2,011)   (1,149)   (3,218)   (2,568)
               
Cash flows from financing activities (16,264)   (7,939)   747   13,800
               
Cash flows from investing activities              
Business acquisitions, net of cash acquired (3,642)   (341)   (16,265)   (27,637)
Purchase of property, plant and equipment (1,238)   (885)   (1,697)   (1,681)
Acquisition of intangible assets (2,930)   (94)   (5,031)   (251)
               
Cash flows from investing activities (7,810)   (1,320)   (22,993)   (29,569)
               
Net change in cash (3,439)   1,115   3,883   (4,998)
               
Effect of exchange rate changes on cash 184   (641)   (889)   (1,173)
               
Increase (decrease) in cash (3,255)   474   2,994   (6,171)
               
Cash - Beginning balance 18,298   10,522   12,049   17,167
               
Cash - Ending balance 15,043   10,996   15,043   10,996

 

 

 

 

 

SOURCE ATRIUM INNOVATIONS INC.



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