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Press release from CNW Group

Atrium Innovations Announces 2011 Second Quarter Financial Results

Wednesday, August 10, 2011

Atrium Innovations Announces 2011 Second Quarter Financial Results16:09 EDT Wednesday, August 10, 2011Strong Contribution from Acquisitions coupled with Solid Organic GrowthQUEBEC CITY, Aug. 10, 2011 /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 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 millionStrong contribution of Seroyal acquisition with integration substantially completedBranded organic growth reached 6.0%EBITDA of $23.8 million or 22.6% of revenues, an increase of 17.2% compared to last yearDiluted EPS of $0.44 for the quarterCash 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 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 www.atrium-innovations.com.Conference Call and WebcastAtrium 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 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 June 30,(unaudited) 2011$ 2010$ Change      Revenues105.2 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 shareholders14.4 12.4 17%      Net earnings per share       Basic0.44 0.38   Diluted0.44 0.37         Reconciliation to non IFRS Financial Data            Net earnings attributable to shareholders14.4 12.4   Acquisition-related costs and interest expensesfor 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      Revenues212.9 175.2 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 shareholders28.6 24.8 15%      Net earnings per share       Basic0.87 0.76   Diluted0.86 0.75    Reconciliation to non IFRS Financial Data     Net earnings attributable to shareholders28.6 24.8   Acquisition-related costs and interest expensesfor acquisition-related contingent liabilities(after-tax)0.1 0.7  Net earnings 28.7 25.5  Net diluted earnings per share0.86 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$Assets       Current assets   Cash15,043 12,049Accounts receivable55,025 50,070Income taxes recoverable6,342 5,018Inventory84,117 79,243Prepaid expenses5,411 4,384     165,938 150,764Property, plant and equipment 22,219 21,916Deferred charges and others3,627 3,238Intangible assets 267,745 251,939Goodwill375,876 360,963Deferred tax assets5,155 8,564 840,560 797,384Liabilities       Current liabilities   Accounts payable and accrued liabilities39,181 38,564Provisions2,106 3,351Contingent considerations15,194 17,583Income taxes598 1,148Deferred revenues344 944Derivative financial instruments959 -Current portion of long-term debt291 217 58,673 61,807Long-term debt306,429 275,614Deferred tax liabilities 69,278 68,970Contingent considerations- 11,877Deferred revenues 152 218Derivative financial instruments - 2,256     434,532 420,742Shareholders' Equity   Share capital92,466 92,664Stock options reserve 2,028 1,767Retained earnings314,490 288,607Accumulated other comprehensive income(3,679) (6,576) 405,305 376,462Non-controlling interest723 180 406,028 376,642 840,560 797,384Atrium Innovations Inc.Consolidated Statements of Earnings(tabular amounts in thousands of US dollars, except share and per share data) Quarters ended June 30, Six months ended June 30, 2011$ 2010$ 2011$ 2010$        Revenues105,161 85,183 212,913 175,236        Operating expenses       Cost of sales50,272 36,332 97,227 74,788Selling and administrative expenses32,185 29,825 70,780 61,733Research and development costs566 505 1,135 1,063         83,023 66,662 169,142 137,584        Earnings from operations22,138 18,521 43,771 37,652        Other revenues (expenses)       Financial revenues69 40 115 261Financial 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 items19,418 17,492 38,901 35,035        Income tax expense4,728 5,131 9,797 10,244                Net earnings for the period14,690 12,361 29,104 24,791        Net earnings for the period attributable to       Shareholders14,446 12,361 28,561 24,791Non-controlling interest244 - 543 -        Net earnings per share       Basic0.44 0.38 0.87 0.76Diluted0.44 0.37 0.86 0.75        Weighted average number of shares outstanding (000's)       Basic32,723 32,667 32,749 32,667Diluted33,107 33,197 33,157 33,203Atrium 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 period14,690 12,361 29,104 24,791        Adjustments for:        Depreciation and amortization1,647 1,761 3,385 3,189 Deferred charges212 (247) 259 (70) Deferred revenues(379) (346) (698) (619) Stock-based compensation costs199 74 288 145 Interest expense2,447 1,487 4,058 2,963 Deferred income taxes71 149 1,340 67 Change in non-cash operating working capital items1,748 (4,865) (11,607) (19,695)        Cash flows from operating activities20,635 10,374 26,129 10,771        Cash flows from financing activities       Increase in long-term debt187 1,434 232,898 25,947Payments on long-term debt(12,699) (8,188) (225,602) (9,558)Deferred financing costs(239) (36) (428) (69)Issuance of shares159 - 347 48Redeemed 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 cash184 (641) (889) (1,173)        Increase (decrease) in cash(3,255) 474 2,994 (6,171)        Cash - Beginning balance18,298 10,522 12,049 17,167        Cash - Ending balance15,043 10,996 15,043 10,996     For further information: Investor Relations:  Mario Paradis Vice President and Chief Financial Officer Tel.: 418 652-1116  mp@atrium-innovations.com Media Relations: Amélie Germain Director of Communications Tel.: 418 652-1116  ag@atrium-innovations.com    Pierre Boucher MaisonBrison Communications Tel.: 514 731-0000, ext. 237 pierre@maisonbrison.com