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Press release from CNW Group

Atrium Innovations Announces 2011 First Quarter Financial Results

Tuesday, May 10, 2011

Atrium Innovations Announces 2011 First Quarter Financial Results17:18 EDT Tuesday, May 10, 2011Strong Contribution from Acquisitions coupledwith Solid Organic Growthof the Branded BusinessQUEBEC CITY, May 10 /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 2011 first quarter results for the period ended March 31, 2011.2011 Highlights: (All amounts are in US dollars.)Revenue growth of 19.7% over previous year to reach $107.8 millionStrong contribution of Seroyal acquisition with integration progressing very wellBranded organic growth reached 6.4%EBITDA of $23.4 million or 21.7% of revenues, an increase of 10.3% compared to last yearDiluted EPS of $0.43 for the quarterCash flow before working capital was up 23.7% to $18.8 million."During the quarter, we successfully progressed with the integration of Seroyal and started to implement a new management structure to support our next growth phase," said Pierre Fitzgibbon, President and Chief Executive Officer. "We experienced strong revenue growth of 19.7% this quarter. We also want to highlight the solid global organic performance of all our branded products which, combined, achieved 6.4% growth during the quarter"."As expected, the EBITDA margin during the quarter was somewhat negatively impacted by above normal levels of selling, general & administrative expenses, reflecting our intense marketing initiatives in Germany. We are pleased by the positive impact that our marketing campaign is having on revenues and the progress made in restoring our market share. At this stage we decided to maintain current investments in marketing in the second half of 2011 to fully secure our rebuilding efforts of the past few quarters. Consequently, we are reducing the guidance of our EBITDA margin range by 1%, to 23%-24%.""Our first quarter results have reached record levels on several financial metrics. The industry fundamentals enjoy solid momentum, particularly in North America, and Atrium is benefiting. 2011 will be a strong year and we remain committed to investing in our business to achieve our goals," concluded Mr. Fitzgibbon.For the quarter ended March 31, 2011, Atrium recorded revenues of $107.8 million representing an increase of 19.7% compared to revenues of $90.1 million in 2010. This increase is mainly attributable to the acquisition of Seroyal as well as to organic growth of the Company's branded business.EBITDA increased by 10.3% to $23.4 million or 21.7% of revenues compared to $21.2 million or 23.5% of revenues for the same period in 2010. The acquisitions of Seroyal, Trophic and Minami contributed to the increase in EBITDA.Net earnings attributable to shareholders were $14.1 million in 2011 compared to $12.4 million in 2010, representing an increase of 13.6%. Net earnings per share ("EPS") on a diluted basis rose to $0.43 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 $18.8 million compared to $15.2 million in 2010. As at March 31, 2011, the Company had a total debt of $313.3 million and a cash position of $18.3 million. Subsequent to quarter-end under an option of its credit agreement, the Company has increased the authorized amount of its revolving credit facility from $300 million to $325 million of which approximately $26 million is available."Cash flow before working capital reached a record level of $18.8 million during the quarter, an increase of 23.7% over the same period last year," said Mario Paradis, Chief Financial Officer of the Company. "During the first quarter, we opted to expand our borrowing capacity to provide us with greater financial flexibility. From December 31, 2010 and the end of the first quarter, the strengthen of the Euro over the US dollars resulted in an increase of $13 million in our long-term debt denominated in euro. In mid-November 2010, our normal course issuer bid became effective and 100,000 shares were acquired under this program during the first quarter of 2011. Subsequent to the quarter end, an additional amount of 20,200 shares was acquired. Considering our strong and steady cash flow, we remain comfortable with our financial position and ratios."About AtriumAtrium 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 Call and WebcastAtrium will hold its quarterly conference call and webcast to discuss its 2011 first quarter results on Tuesday May 10, 2011 at 5:30 p.m., Eastern Time. Participants may access the call by using the following numbers: 514-807-8791, 877-974-0445, or 416-644-3426. A live webcast is also available via the Company's website at 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 MeasuresThe 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 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 statementAtrium Innovations Inc.Financial Summary (unaudited)(in millions of US dollars except per share amounts) Consolidated results for the quarters ended March 31, (unaudited) 2011$ 2010$ Change      Revenues107.8 90.1 20%      Gross profit(1)60.8 51.6 18% 56.4% 57.3%        EBITDA(2)23.4 21.2 10% 21.7% 23.5%        Net earnings attributable to shareholders14.1 12.4 14%      Net earnings per share       Basic0.43 0.38   Diluted0.43 0.37                      Reconciliation to non IFRS Financial Data     Net earnings attributable to shareholders14.1 12.4   Acquisition-related costs and interest expensesfor acquisition-related contingent liabilities(after-tax)0.1 0.6  Net earnings 14.2 13.0  Net diluted earnings per share 0.43 0.39  (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 March 31, As at December 31, 2011$ 2010$Assets       Current assets   Cash18,298 12,049Accounts receivable56,811 50,070Income taxes recoverable6,316 5,018Inventory83,035 79,243Prepaid expenses5,846 4,384     170,306 150,764Property, plant and equipment 21,808 21,916Deferred charges and others3,669 3,238Intangible assets 262,234 251,939Goodwill371,180 360,963Deferred tax assets9,446 8,564 838,643 797,384    Liabilities   Current liabilities   Accounts payable and accrued liabilities37,894 38,564Provision3,019 3,351Purchase price adjustment- -Contingent considerations5,319 17,583Income taxes589 1,148Deferred revenues716 944Current portion of long-term debt211 217 47,748 61,807Long-term debt313,057 275,614Deferred tax liabilities 72,708 68,970Contingent considerations11,910 11,877Deferred revenues 154 218Derivative financial instruments 1,195 2,256 446,772 420,742Shareholders' Equity   Share capital91,290 92,664Stock option reserve 1,829 1,767Retained earnings302,722 288,607Accumulated other comprehensive (4,449) (6,576) 391,392 376,462Non-controlling interest479 180 391,871 376,642 838,643 797,384Atrium Innovations Inc.Consolidated Statements of Earnings(tabular amounts in thousands of US dollars, except share and per share data) Quarters Ended March 31,  2011$ 2010$    Revenues107,752 90,053    Operating expenses   Cost of sales46,955 38,456Selling and administrative expenses38,595 31,908Research and development costs569 558 86,119 70,922    Earnings from operations21,633 19,131    Other revenues (expenses)   Financial revenues46 221Financial expenses(1,999) (1,764)Foreign exchange loss(197) (45) (2,150) (1,588)    Earnings before the following items19,483 17,543    Income tax expense5,069 5,113    Net earnings for the period14,115 12,430    Net earnings for the period attributable to   Shareholders14,115 12,430Non-controlling interest299 -    Net earnings per share   Basic0.43 0.38Diluted0.43 0.37    Weighted average number of shares outstanding (000's)   Basic32,774 32,667Diluted33,203 33,209Atrium Innovations Inc.Consolidated Statements of Cash Flows(expressed in thousands of US dollars) Quarters Ended March 31, 2011$ 2010$Cash flows from operating activities   Net earnings for the period14,414 12,430    Adjustments for:    Depreciation and amortization1,738 1,428 Deferred charges47 177 Deferred revenues(319) (273) Stock-based compensation costs89 71 Interest expense1,611 1,476 Deferred income taxes1,269 (82)Change in non-cash operating working capital items(13,355) (14,830)    Cash flows from operating activities5,494 397    Cash flows from financing activities   Increase in long-term debt232,711 24,513Payments on long-term debt(212,903) (1,370)Deferred financing costs(189) (33)Issuance of shares188 48Redeemed and cancelled under a normal course issuer bid(1,589) -Interest paid(1,207) (1,419)    Cash flows from financing activities17,011 21,739    Cash flows from investing activities   Business acquisitions, net of cash acquired(12,623) (27,296)Purchase of property, plant and equipment(459) (796)Acquisition of intangible assets(2,101) (157)    Cash flows from investing activities(15,183) (28,249)    Net change in cash7,322 (6,113)    Effect of exchange rate changes on cash(1,073) (532)    Increase (decrease) in cash6,249 (6,645)    Cash - Beginning balance12,049 17,167    Cash - Ending balance18,298 10,522    For 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      Pierre Boucher MaisonBrison Communications Tel.: 514 731-0000, ext. 237