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Press release from CNW Group

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

Monday, February 28, 2011

Atrium Innovations Announces 2010 Full-Year Financial Results and Executive Management Appointments16:05 EST Monday, February 28, 2011Solid 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 millionNorth American branded business posted 9.5% growth in 2010Sales in Germany troughed in Q2 and improved sequentially in Q3 and Q4EBITDA of $83.9 million or 23.5% of revenues and diluted EPS of $1.55 for the yearCompletion 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 millionNet 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 2010For 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 StructureEffective 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 AtriumAtrium 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 www.atrium-innovations.com.Conference Call and WebcastAtrium 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 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-GAAP Financial MeasuresThe 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 StatementsThis 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 summaryBalance 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, 2010$ 2009$ Change       Revenues356.6 319.7 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 earnings51.6 48.7 6.0%      Net earnings per share      Basic1.58 1.50   Diluted1.55 1.47   Consolidated results for the quarter ended December 31, 2010$ 2009$ Change      Revenues92.5 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 earnings13.4 13.8 -3.3%      Net earnings per share      Basic0.41 0.42   Diluted0.40 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,  2010$ 2009$Assets         Current assets    Cash 12,049 17,167Accounts receivable 50,070 45,100Income taxes recoverable 5,018 4,904Inventory 79,243 58,738Prepaid expenses 4,384 2,045Future income tax assets 733 741  151,497 128,695     Property, plant and equipment  21,916 17,268Deferred charges and others 3,238 3,050Intangible assets  251,939 214,304Goodwill 353,379 262,832Future income tax assets 6,502 7,505  788,471 633,654Liabilities         Current liabilities    Accounts payable and accrued liabilities 56,890 43,160Purchase price adjustment - 22,725Income taxes 1,148 272Deferred revenues 944 1,457Current portion of long-term debt 217 -  59,199 67,614     Long-term debt 275,614 169,891Future income tax liabilities  68,736 57,536Deferred revenues  218 1,000Derivative financial instruments  2,256 2,466Non-controlling interest 180 -  406,203 298,507Shareholders' Equity    Share capital 92,664 92,300Contributed surplus  2,517 2,292Retained earnings 282,692 231,081Accumulated other comprehensive income 4,395 9,474  382,268 335,147  788,471 633,654 Atrium Innovations Inc.Consolidated Statements of Earnings(tabular amounts in thousands of US dollars, except share and per share data)   Years ended December 31,       2010$ 2009$     Revenues 356,630 319,655     Operating expenses    Cost of sales 153,602 140,405Selling and administrative expenses 119,577 98,427Research and development costs 2,021 2,330Depreciation 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 298Financial 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 1.50Diluted 1.55 1.47     Weighted average number of shares outstanding (000's)    Basic 32,699 33,508Diluted 33,208 33,038 Atrium Innovations Inc.Consolidated Statements of Cash Flows(expressed in thousands of US dollars)  Years ended December 31,     2010$ 2009$Cash flows from operating activities   Net earnings of the year51,611 48,670    Items not affecting cash and cash equivalents    Depreciation and amortization6,782 6,496 Deferred charges329 616 Deferred revenues(1,367) (1,509) Stock-based compensation costs233 352 Future income taxes1,707 (759)Change in non-cash operating working capital items(23,425) (2,542)    Cash flows from operating activities35,870 51,324    Cash flows from financing activities   Increase in long-term debt139,936 78,448Payments on long-term debt(24,124) (94,660)Deferred financing costs(370) (342)Issuance of shares356 44    Cash flows from financing activities115,798 (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) 1,020Decrease in cash(5,118) (20,837)Cash - Beginning of year17,167 38,004Cash - End of year12,049 17,167For 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 mp@atrium-innovations.com ag@atrium-innovations.com  Pierre Boucher MaisonBrison Communications Tel.: 514 731-0000, ext. 237 pierre@maisonbrison.com