Atrium Innovations Announces 2011 Third Quarter Financial Results
Continued growth reported in the quarter
QUEBEC CITY, Nov. 9, 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 third quarter results for the period ended September 30, 2011.
Third Quarter Highlights:
(All amounts are in US dollars.)
- Revenue growth of 9.1% over previous year to reach $97.0 million
- EBITDA of $22.4 million or 23.1% of revenues, an increase of 5.6% compared to last year
- Diluted EPS of $0.41 for the quarter, an increase of 8% over last year
- Cash flow before working capital was up 12% to $19.2 million
- Closing of CAN$100 million of convertible debentures
- Vertical acquisition of Enzimas SA well in progress
"Our branded organic growth was 3.5% for the quarter, when adjusted for the shipment lag to our distributor in Eastern Europe. This organic growth was affected by the completion of our repositioning of our Direct to Consumer business which should allow us to report higher global branded organic growth in the future. We are satisfied with our sequential improvement in the EBITDA margin which should continue to improve throughout 2012 in each segments, as we complete our various improvement programs including our Pittsburgh manufacturing facility," said Pierre Fitzgibbon, President and Chief Executive Officer.
"With the appointment of Mr. Hannema, the new management structure will allow us to solidify our foundation and thoroughly implement our operating efficiencies and synergies. We now have the operating platform to generate strong results and confirm our leadership position in the industry and we will continue our acquisition program on a selective basis,'' concluded Mr. Fitzgibbon.
For the quarter ended September 30, 2011, Atrium recorded revenues of $97.0 million representing an increase of 9.1% compared to revenues of $88.9 million in 2010. This increase is mainly attributable to the acquisitions of Seroyal and Minami.
EBITDA increased by 5.6% to $22.4 million, or 23.1% of revenues, compared to $21.2 million, or 23.8% of revenues, for the same period in 2010. The acquisitions of Seroyal and Minami contributed to the increase in EBITDA.
Net earnings attributable to shareholders were $13.4 million in 2011 compared to $12.7 million in 2010, representing an increase of 5.4%. Net earnings per share ("EPS") on a diluted basis rose to $0.41 per share, as compared to $0.38 per share for the same period in 2010.
Cash flows from operating activities before changes in non-cash working capital items were $19.2 million compared to $17.1 million in 2010. As at September 30, 2011, the Company had a total debt of $190.8 million and a cash position of $13.7 million. During this quarter, the Company announced the closing of a convertible debenture public offering of CAN$75 million and a concurrent private placement of CAN$25 million. The net proceeds were used to reduce the Company's outstanding indebtedness.
New Management Structure Completed
Recently, Paul Hannema was appointed to the position of Executive Vice President, Head of European Operations. Mr. Hannema has been President and Chief Executive Officer of MCO Health since June 2010 and will continue to hold that position. Other key changes to the executive team include the addition at the corporate level of David Torralbo as Vice President, Corporate and Legal Affairs, and Annie Blanchette as Vice President, Human Resources, a new position at Atrium. With these appointments, the new management structure, initiated at the beginning of 2011 was completed. The Atrium Executive Committee is now comprised of the following individuals:
- Pierre Fitzgibbon, President and CEO
- Carmen Fortino, President, North American Operations
- Paul Hannema, Executive Vice President, Head of European Operations
- Annie Blanchette, Vice President, Human Resources
- Mario Paradis, Vice President and CFO
- Barry W. Ritz, Vice President, Scientific and Regulatory Affairs
- David Torralbo, Vice President, Corporate and Legal Affairs
- Serge Yelle, Executive Vice President, Strategy and Business Development
Renewed NCIB Program
The Company also announced today that it has filed with the Toronto Stock Exchange ("TSX"), and the TSX has accepted, a Notice of Intention to make a Normal Course Issuer Bid. Under its normal course issuer bid, Atrium intends to purchase up to 813,970 of its common shares, representing approximately 2.5% of the 32,558,816 common shares issued and outstanding as of October 31, 2011. The average daily trading volume for the 6-month period preceding October 31, 2011 represents 31,531 common shares. In accordance with the TSX requirements, a maximum daily purchase of the greater of 25% of this average or 1,000 shares may be made, which represents a total of 7,882 common shares.
Purchases will be made on the open market by Atrium through the facilities of the TSX. The purchases may commence on November 15, 2011 and will terminate on November 14, 2012, or on such earlier date as Atrium will have completed its purchases pursuant to the Notice of Intention to make a Normal Course Issuer Bid filed with the TSX. Atrium will cancel any common shares purchased pursuant to the normal course issuer bid. Atrium will pay the market price of common shares on the TSX at the time of purchase and no purchases of common shares will be made other than open-market purchases.
Under its previous normal course issuer bid which was announced on November 10, 2010, Atrium repurchased a total of 386,524 common shares as at October 31, 2011 at the weighted average price per share of $14.5620.
Atrium considers that repurchasing its common shares is a sound business and financial decision as shares in circulation will be reduced and the proportionate interest of all remaining shareholders in the share capital of Atrium will be increased on a pro rata basis.
No appraisal or valuation regarding Atrium, its material assets or securities was prepared within the two years preceding the date of the Notice of Intention to make a Normal Course Issuer Bid.
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 1,100 employees and operates eight 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 third quarter results on November 10, 2011 at 8:30 a.m., Eastern Time. Participants may access the call by using the following numbers: 514-940-2795, 800-589-8577, 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) |
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Consolidated results for the quarters ended September 30, (unaudited) |
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2011 $ |
2010 $ |
Change | ||||
Revenues | 97.0 | 88.9 | 9% | |||
Gross profit (1) | 52.2 | 49.1 | ||||
53.8% | 55.3% | |||||
EBITDA (2) | 22.4 | 21.2 | 6% | |||
23.1% | 23.8% | |||||
Net earnings attributable to shareholders | 13.4 | 12.7 | 6% | |||
Net earnings per share | ||||||
Diluted | 0.41 | 0.38 | 8% | |||
Reconciliation to non IFRS Financial Data | ||||||
Net earnings attributable to shareholders | 13.4 | 12.7 | ||||
Acquisition-related costs and interest expenses for acquisition-related contingent liabilities (after-tax) |
0.1 | - | ||||
Net earnings | 13.5 | 12.7 | 6% | |||
Net diluted earnings per share | 0.41 | 0.38 | 8% |
(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 nine-month periods ended September 30, (unaudited) |
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2011 $ |
2010 $ |
Change | ||||
Revenues | 309.9 | 264.1 | 17% | |||
Gross profit (1) | 167.9 | 149.6 | ||||
54.2% | 56.6% | |||||
EBITDA (2) | 69.6 | 62.7 | 11% | |||
22.5% | 23.7% | |||||
Net earnings attributable to shareholders | 41.9 | 37.5 | 12% | |||
Net earnings per share | ||||||
Diluted | 1.27 | 1.13 | 12% | |||
Reconciliation to non IFRS Financial Data | ||||||
Net earnings attributable to shareholders | 41.9 | 37.5 | ||||
Acquisition-related costs and interest expenses for acquisition-related contingent liabilities (after-tax) |
0.2 | 0.6 | ||||
Net earnings | 42.1 | 38.1 | 11% | |||
Net diluted earnings per share | 1.27 | 1.15 | 11% |
(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 September 30, | As at December 31, | ||
2011 $ |
2010 $ |
||
Assets | |||
Current assets | |||
Cash | 13,660 | 12,049 | |
Accounts receivable | 51,371 | 50,070 | |
Income taxes recoverable | 7,129 | 5,018 | |
Inventory | 87,802 | 79,243 | |
Prepaid expenses | 4,892 | 4,384 | |
164,854 | 150,764 | ||
Property, plant and equipment | 22,625 | 21,916 | |
Deferred charges and others | 3,196 | 3,238 | |
Intangible assets | 253,478 | 251,939 | |
Goodwill | 359,869 | 360,963 | |
Deferred tax assets | 10,450 | 8,564 | |
814,472 | 797,384 | ||
Liabilities | |||
Current liabilities | |||
Accounts payable and accrued liabilities | 37,927 | 38,564 | |
Provisions | - | 3,351 | |
Contingent considerations | 15,415 | 17,583 | |
Income taxes | 1,043 | 1,148 | |
Deferred revenues | 280 | 944 | |
Derivative financial instruments | 1,096 | - | |
Current portion of long-term debt | 294 | 217 | |
56,055 | 61,807 | ||
Long-term debt | 190,502 | 275,614 | |
Convertible debentures | 91,264 | - | |
Deferred tax liabilities | 70,390 | 68,970 | |
Contingent considerations | 490 | 11,877 | |
Deferred revenues | 106 | 218 | |
Derivative financial instruments | - | 2,256 | |
408,807 | 420,742 | ||
Shareholders' Equity | |||
Share capital | 92,190 | 92,664 | |
Stock options reserve | 2,236 | 1,767 | |
Retained earnings | 326,755 | 288,607 | |
Accumulated other comprehensive loss | (16,310) | (6,576) | |
404,871 | 376,462 | ||
Non-controlling interest | 794 | 180 | |
405,665 | 376,642 | ||
814,472 | 797,384 |
Atrium Innovations Inc. Consolidated Statements of Earnings (tabular amounts in thousands of US dollars, except share and per share data) |
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Quarters ended September 30, |
Nine months ended September 30, |
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2011 $ |
2010 $ |
2011 $ |
2010 $ |
|||||
Revenues | 96,988 | 88,850 | 309,901 | 264,086 | ||||
Operating expenses | ||||||||
Cost of sales | 44,774 | 39,716 | 142,001 | 114,504 | ||||
Selling and administrative expenses | 31,130 | 29,211 | 101,910 | 90,944 | ||||
Research and development costs | 902 | 331 | 2,037 | 1,394 | ||||
76,806 | 69,258 | 245,948 | 206,842 | |||||
Earnings from operations | 20,182 | 19,592 | 63,953 | 57,244 | ||||
Other revenues (expenses) | ||||||||
Financial revenues | 92 | 2 | 207 | 263 | ||||
Financial expenses | (3,674) | (1,799) | (8,417) | (5,336) | ||||
Foreign exchange gain (loss) | (102) | (297) | (344) | 362 | ||||
Change in fair value of embedded derivative | 665 | - | 665 | - | ||||
(3,019) | (2,094) | (7,889) | (4,711) | |||||
Earnings before the following items | 17,163 | 17,498 | 56,064 | 52,533 | ||||
Income tax expense | 3,741 | 4,835 | 13,538 | 15,079 | ||||
Net earnings for the period | 13,422 | 12,663 | 42,526 | 37,454 | ||||
Net earnings for the period attributable to | ||||||||
Shareholders | 13,351 | 12,663 | 41,912 | 37,454 | ||||
Non-controlling interest | 71 | - | 614 | - | ||||
Net earnings per share | ||||||||
Basic | 0.41 | 0.39 | 1.28 | 1.15 | ||||
Diluted | 0.41 | 0.38 | 1.27 | 1.13 | ||||
Weighted average number of shares outstanding (000's) | ||||||||
Basic | 32,622 | 32,667 | 32,706 | 32,667 | ||||
Diluted | 32,965 | 33,196 | 33,092 | 33,201 | ||||
Atrium Innovations Inc. Consolidated Statements of Cash Flows (expressed in thousands of US dollars) |
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Quarters ended September 30, |
Nine months ended September 30, |
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2011 $ |
2010 $ |
2011 $ |
2010 $ |
|||||
Cash flows from operating activities | ||||||||
Net earnings for the period | 13,422 | 12,663 | 42,526 | 37,454 | ||||
Adjustments for: | ||||||||
Depreciation and amortization | 2,053 | 1,630 | 5,438 | 4,819 | ||||
Deferred charges | 399 | 189 | 658 | 119 | ||||
Deferred revenues | (84) | (351) | (782) | (970) | ||||
Change in fair value of embedded derivative | (665) | - | (665) | - | ||||
Stock-based compensation costs | 208 | 45 | 496 | 190 | ||||
Interest expense | 3,166 | 1,397 | 7,224 | 4,360 | ||||
Deferred income taxes | 731 | 1,574 | 2,071 | 1,641 | ||||
Change in non-cash operating working capital items | (7,714) | 991 | (19,321) | (18,704) | ||||
Cash flows from operating activities | 11,516 | 18,138 | 37,645 | 28,909 | ||||
Cash flows from financing activities | ||||||||
Increase in long-term debt | 4,078 | 1,204 | 236,976 | 27,151 | ||||
Payments on long-term debt | (101,155) | (3,954) | (326,757) | (13,512) | ||||
Proceed from the issuance of convertible debentures | 101,081 | - | 101,081 | - | ||||
Transaction costs | (4,044) | (37) | (4,472) | (106) | ||||
Issuance of shares | - | - | 347 | 48 | ||||
Redeemed and cancelled under a normal course issuer bid | (1,362) | - | (4,612) | - | ||||
Interest paid | (1,686) | (1,119) | (4,904) | (3,687) | ||||
Cash flows from financing activities | (3,088) | (3,906) | (2,341) | 9,894 | ||||
Cash flows from investing activities | ||||||||
Business acquisitions, net of cash acquired | (4,250) | (124) | (20,515) | (27,761) | ||||
Purchase of property, plant and equipment | (925) | (742) | (2,622) | (2,423) | ||||
Acquisition of intangible assets | (3,151) | (2,302) | (8,182) | (2,553) | ||||
Cash flows from investing activities | (8,326) | (3,168) | (31,319) | (32,737) | ||||
Net change in cash | 102 | 11,064 | 3,985 | 6,066 | ||||
Effect of exchange rate changes on cash | (1,485) | 516 | (2,374) | (657) | ||||
Increase (decrease) in cash | (1,383) | 11,580 | 1,611 | 5,409 | ||||
Cash - Beginning balance | 15,043 | 10,996 | 12,049 | 17,167 | ||||
Cash - Ending balance | 13,660 | 22,576 | 13,660 | 22,576 |
SOURCE ATRIUM INNOVATIONS INC.
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