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Press release from CNW Group

Atrium Innovations Announces 2011 Third Quarter Financial Results

Wednesday, November 09, 2011

Atrium Innovations Announces 2011 Third Quarter Financial Results16:18 EST Wednesday, November 09, 2011Continued growth reported in the quarterQUEBEC CITY, Nov. 9, 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 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 millionEBITDA of $22.4 million or 23.1% of revenues, an increase of 5.6% compared to last yearDiluted EPS of $0.41 for the quarter, an increase of 8% over last yearCash flow before working capital was up 12% to $19.2 millionClosing of CAN$100 million of convertible debenturesVertical 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 CompletedRecently, 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 CEOCarmen Fortino, President, North American OperationsPaul Hannema, Executive Vice President, Head of European OperationsAnnie Blanchette, Vice President, Human ResourcesMario Paradis, Vice President and CFOBarry W. Ritz, Vice President, Scientific and Regulatory AffairsDavid Torralbo, Vice President, Corporate and Legal AffairsSerge Yelle, Executive Vice President, Strategy and Business DevelopmentRenewed NCIB ProgramThe 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 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 1,100 employees and operates eight manufacturing facilities. Additional information is available at Call and WebcastAtrium 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 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 statement      Atrium Innovations Inc.Financial Summary (unaudited)(in millions of US dollars except per share amounts)      Consolidated results for the quarters ended September 30,(unaudited) 2011$ 2010$ Change      Revenues97.0 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 shareholders13.4 12.7 6%Net earnings per share       Diluted0.41 0.38 8%            Reconciliation to non IFRS Financial Data           Net earnings attributable to shareholders13.4 12.7   Acquisition-related costs and interest expensesfor 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) 2011$ 2010$ Change      Revenues309.9 264.1 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 shareholders41.9 37.5 12%Net earnings per share       Diluted1.27 1.13 12%            Reconciliation to non IFRS Financial Data           Net earnings attributable to shareholders41.9 37.5   Acquisition-related costs and interest expensesfor 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$Assets       Current assets   Cash13,660 12,049Accounts receivable51,371 50,070Income taxes recoverable7,129 5,018Inventory87,802 79,243Prepaid expenses4,892 4,384 164,854 150,764Property, plant and equipment 22,625 21,916Deferred charges and others3,196 3,238Intangible assets 253,478 251,939Goodwill359,869 360,963Deferred tax assets10,450 8,564 814,472 797,384    Liabilities       Current liabilities   Accounts payable and accrued liabilities37,927 38,564Provisions- 3,351Contingent considerations15,415 17,583Income taxes1,043 1,148Deferred revenues280 944Derivative financial instruments1,096 -Current portion of long-term debt294 217 56,055 61,807Long-term debt190,502 275,614Convertible debentures 91,264 -Deferred tax liabilities 70,390 68,970Contingent considerations490 11,877Deferred revenues 106 218Derivative financial instruments - 2,256 408,807 420,742    Shareholders' Equity       Share capital92,190 92,664Stock options reserve 2,236 1,767Retained earnings326,755 288,607Accumulated other comprehensive loss (16,310) (6,576) 404,871 376,462Non-controlling interest794 180 405,665 376,642 814,472 797,384        Atrium Innovations Inc.Consolidated Statements of Earnings(tabular amounts in thousands of US dollars, except share and per share data)         Quarters endedSeptember 30, Nine months endedSeptember 30, 2011$ 2010$ 2011$ 2010$        Revenues96,988 88,850 309,901 264,086        Operating expenses       Cost of sales44,774 39,716 142,001 114,504Selling and administrative expenses31,130 29,211 101,910 90,944Research and development costs902 331 2,037 1,394 76,806 69,258 245,948 206,842Earnings from operations20,182 19,592 63,953 57,244        Other revenues (expenses)       Financial revenues92 2 207 263Financial expenses(3,674) (1,799) (8,417) (5,336)Foreign exchange gain (loss)(102) (297) (344) 362Change in fair value of embedded derivative665 - 665 - (3,019) (2,094) (7,889) (4,711)Earnings before the following items17,163 17,498 56,064 52,533Income tax expense3,741 4,835 13,538 15,079Net earnings for the period13,422 12,663 42,526 37,454        Net earnings for the period attributable to       Shareholders13,351 12,663 41,912 37,454Non-controlling interest71 - 614 -        Net earnings per share       Basic0.41 0.39 1.28 1.15Diluted0.41 0.38 1.27 1.13        Weighted average number of shares outstanding (000's)       Basic32,622 32,667 32,706 32,667Diluted32,965 33,196 33,092 33,201                Atrium Innovations Inc.Consolidated Statements of Cash Flows(expressed in thousands of US dollars)         Quarters endedSeptember 30, Nine months endedSeptember30, 2011$ 2010$ 2011$ 2010$Cash flows from operating activities       Net earnings for the period13,422 12,663 42,526 37,454Adjustments for:        Depreciation and amortization2,053 1,630 5,438 4,819 Deferred charges399 189 658 119 Deferred revenues(84) (351) (782) (970) Change in fair value of embedded derivative(665) - (665) - Stock-based compensation costs208 45 496 190 Interest expense3,166 1,397 7,224 4,360 Deferred income taxes731 1,574 2,071 1,641Change in non-cash operating working capital items(7,714) 991 (19,321) (18,704)Cash flows from operating activities11,516 18,138 37,645 28,909        Cash flows from financing activities       Increase in long-term debt4,078 1,204 236,976 27,151Payments on long-term debt(101,155) (3,954) (326,757) (13,512)Proceed from the issuance of convertible debentures101,081 - 101,081 -Transaction costs(4,044) (37) (4,472) (106)Issuance of shares- - 347 48Redeemed 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 cash102 11,064 3,985 6,066Effect of exchange rate changes on cash(1,485) 516 (2,374) (657)Increase (decrease) in cash(1,383) 11,580 1,611 5,409Cash - Beginning balance15,043 10,996 12,049 17,167Cash - Ending balance13,660 22,576 13,660 22,576 For further information: Investor Relations:    Media Relations: Mario Paradis       Vice President and Chief Financial Officer Tel.: 418 652-1116 Pierre Boucher MaisonBrison Communications Tel.: 514 731-0000, ext. 237   Amélie Germain Director of Communications Tel.: 418 652-1116