Atrium Innovations Announces 2012 First Quarter Financial Results
Solid Performance of Health Food Stores and Healthcare Practitioners, and Restructuring Being Undertaken to Enhance Profitability in Europe
QUEBEC CITY, May 14, 2012 /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 results for the quarter ended March 31, 2012.
First Quarter 2012 Highlights:
(All amounts are in US dollars.)
- Total revenue growth of 2.0% over last year, or 3.2% on a currency-neutral basis, all organic, to reach $110.0 million
- Total branded revenue organic growth of 5.1%
- EBITDA of $22.8 million or 20.8% of revenue, in line with expectations
- Implementation of a comprehensive restructuring plan totalling $4 million to streamline and optimize European operations, and to align the cost structure to current economic and market conditions
- Adjusted diluted EPS of $0.46 for the quarter
- Cash flows before working capital, interest and after-tax restructuring costs were up 5.5% to $19.9 million
- Repurchased 829,776 shares during the quarter under our NCIB program
"We are pleased with our organic growth for the quarter despite expected lower revenues in some of our business segments year over year. The U.S. market has been particularly strong, reflecting the strength and dynamism of our Healthcare Practitioner (HCP) and Health Food Store (HFS) platforms. In Europe, revenues of Wobenzym in Germany grew by 5.0% following refocused sales and marketing efforts. The first quarter EBITDA margin of 20.8% represented a slight sequential improvement over the fourth quarter of 2011, and we continue to be committed to gradually improve our EBITDA margins. We have taken measures to improve our operating efficiencies in the U.S. and to right-size our resources and facilities in Europe with the comprehensive restructuring plan currently being implemented. The benefits of these initiatives will be progressive throughout the year and will provide a short payback. However the solid growth of our HFS business, which operates in a segment with lower EBITDA margins, will continue to impact our overall margins. Additionally, we are committed to improving organic growth by focusing and leveraging a select group of brands on a world-wide basis and to continue to make acquisitions on a selective basis," said Pierre Fitzgibbon, President and Chief Executive Officer of Atrium.
For the quarter ended March 31, 2012, Atrium recorded revenues of $110.0 million representing an increase of 2.0% (3.2% on a currency-neutral basis) compared to revenues of $107.8 million in 2011. The increase, all organic, is mainly attributable to the solid performance of the HCP and HFS channels in North America, with organic growth of 8% and 15%, respectively, and improved sales in Germany, with a growth of 5%, and is partially offset by revenue decreases in other European regions and CMO business, and also the unfavourable impact of exchange rates.
EBITDA for the quarter was $22.8 million or 20.8% of revenues compared to $23.4 million or 21.7% of revenues for the same period in 2011. The EBITDA margin decreased by 0.9% year over year and is largely explained by a decline in the gross margin related to product mix partly offset by a decrease in selling and administrative expenses, as marketing expenses in Europe were higher last year.
Net earnings attributable to shareholders were $11.7 million for the first quarter in 2012 compared to $14.1 million in 2011, while net earnings per share ("EPS") on a diluted basis were $0.32 per share, as compared to $0.43 per share for the same period in 2011. Adjusted net earnings (without giving effect to the one-time restructuring costs and the dilutive effect of the convertible debenture) were $14.7 million for the first quarter in 2012 compared to $14.2 million in 2011 and adjusted diluted EPS were $0.46 in 2012 compared to diluted EPS of $0.43 in 2011.
Cash flows from operating activities before changes in non-cash working capital items, interest expenses and after-tax restructuring costs were $19.9 million, an increase of 5.5% compared to $18.8 million in 2011. As at March 31, 2012, the Company had a total debt of $301.0 million and a cash position of $14.1 million.
During the quarter, under its normal course issuer bid (NCIB) program, the Company repurchased and cancelled 829,776 common shares for a total consideration of $9.0 million. Furthermore, 61,292 shares were repurchased during the month of April and the number of outstanding shares currently stands at 31,456,478, representing a 4.8% reduction in comparison to when the NCIB program was first launched in November of 2010.
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 2012 first quarter results on May 15, 2012 at 8:00 a.m., Eastern Time. Participants may access the call by using the following numbers: 514-807-9895 (Montreal Area), 888-231-8191 (Toll Free) or 647-427-7450 (Toronto area and overseas). 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 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*, EBITDA*, and Adjusted EPS*) 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, restructuring and acquisition 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 theses 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, 2011 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.
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 March 31,|
|Gross profit (1)||58.7||60.8|
|Diluted net earnings per share||0.32||0.43||-26%|
|Reconciliation to non IFRS Financial Data|
|Provision for restructuring costs, net of related taxes||2.9||-|
|Interest expenses for acquisition-related contingent liabilities||0.1||0.1|
|Adjusted net earnings under non-IFRS||14.7||14.2||4%|
|Adjusted diluted net earnings per share under non-IFRS (3)||0.46||0.43||7%|
|(1)||Gross profit means sales less cost of goods sold.|
|(2)||EBITDA means earnings before interest, taxes, depreciation, amortization, restructuring and acquisition-related costs.|
Without giving the dilutive effect of the convertible debentures.
Atrium Innovations Inc.
Consolidated Balance Sheets
(Expressed in thousands of US dollars)
|As at March 31,||As at December 31,|
|Income taxes recoverable||8,120||5,841|
|Property, plant and equipment||24,349||23,296|
|Deferred charges and others||4,263||4,218|
|Deferred tax assets||3,528||5,634|
|Accounts payable and accrued liabilities||41,623||44,122|
|Derivative financial instruments||472||704|
|Current portion of long-term debt||350||292|
|Deferred tax liabilities||66,869||67,056|
|Stock options reserve||2,574||2,394|
|Accumulated other comprehensive loss||(13,766)||(17,706)|
Atrium Innovations Inc.
Consolidated Statements of Earnings
(tabular amounts in thousands of US dollars, except share and per share data)
|Quarters ended March 31,|
|Cost of sales||51,286||46,955|
|Selling and administrative expenses||37,713||38,595|
|Research and development costs||667||569|
|Earnings from operations||16,286||21,633|
|Other revenues (expenses)|
|Foreign exchange gain (loss)||461||(197)|
|Change in fair value of embedded derivative||1,922||-|
|Earnings before income taxes||15,102||19,483|
|Income tax expense||3,481||5,069|
|Net earnings for the period||11,621||14,414|
|Net earnings for the period attributable to|
|Net earnings per share|
|Weighted average number of shares outstanding (000's)|
Atrium Innovations Inc.
Consolidated Statements of Cash Flows
(expressed in thousands of US dollars)
|Quarters Ended March 31,|
|Cash flows from operating activities|
|Net earnings for the period||11,621||14,414|
|Depreciation and amortization||2,531||1,738|
|Change in fair value of embedded derivative||(1,922)||-|
|Stock-based compensation costs||180||89|
|Deferred income taxes||1,132||1,269|
|Foreign exchange gain on long-term debt||(86)||-|
|Change in non-cash operating working capital items||(5,583)||(13,355)|
|Cash flows from operating activities||11,340||5,494|
|Cash flows from financing activities|
|Increase in long-term debt||12,090||232,711|
|Payments on long-term debt||(85)||(212,903)|
|Issuance of shares||-||188|
|Shares redeemed and cancelled under a normal course issuer bid||(9,045)||(1,589)|
|Cash flows from (used in) financing activities||(1,800)||17,011|
|Cash flows from investing activities|
|Business acquisitions, net of cash acquired||(14,809)||(12,623)|
|Purchase of property, plant and equipment||(1,618)||(459)|
|Additions to intangible assets||(1,890)||(2,101)|
|Cash flows used in investing activities||(18,317)||(15,183)|
|Effect of exchange rate changes on cash||65||(1,073)|
|Increase (decrease) in cash||(8,712)||6,249|
|Cash - Beginning of period||22,800||12,049|
|Cash - Ending of period||14,088||18,298|
SOURCE ATRIUM INNOVATIONS INC.