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Press release from CNW Group

Atrium Innovations Announces 2012 Second Quarter Financial Results

Thursday, August 09, 2012

Atrium Innovations Announces 2012 Second Quarter Financial Results16:00 EDT Thursday, August 09, 2012Solid Organic Growth PerformanceQUEBEC CITY, Aug. 9, 2012 /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 results for the quarter ended June 30, 2012.Second Quarter 2012 Highlights:(All amounts are in US dollars.)Total revenue growth of 4.1% over last year, or 7.4% on a currency-neutral basis, all organic, to reach $109.5 millionTotal branded revenue recorded solid organic growth of 12.2%EBITDA of $21.3 million or 19.5% of revenue, reflecting investments in marketingAdjusted diluted EPS of $0.38 for the quarterCash flows before working capital, interest and after restructuring costs remain strong at $17.8 million"We posted solid organic growth on a global basis with a particularly strong performance from our branded products at 12.2%, reflecting solid momentum in the HCP and Retail channels in North America. While our European operations faced some headwinds from the weak general economy, we are pleased by the 3.7% growth rate (currency neutral) recorded for the quarter. Overall, revenues surpassed our expectations given the expected decrease in our Retail Private Label business," said Pierre Fitzgibbon, President and CEO."Lower EBITDA margin for the quarter reflects a growth rate at Garden of Life well above the industry. In addition, significant investments in mailers were made at Nutri-Health which caused a negative EBITDA. As a result, we are currently reviewing the traditional mailing business model."Aligned with our right-sizing initiatives, we have decided to close our manufacturing operations in Penticton, British Columbia by the end of September 2012. Production is in the process of being transferred to our other manufacturing facilities."As indicated over the past year, we face heightened pressure from a regulatory perspective. Associated expenses to elevate our cGMP standards have and will continue to impact margins. However, we are seeing evidence that the industry dynamic is changing which will allow overtime recovering part of these regulatory expenses," concluded Mr. Fitzgibbon.For the quarter ended June 30, 2012, Atrium recorded revenues of $109.5 million representing an increase of 4.1% (7.4% on a currency-neutral basis) compared to revenues of $105.2 million in 2011. The increase, all organic, is mainly attributable to the solid performance of our branded products with organic growth of 12.2% including solid momentum of HCP and HFS brands partially offset by revenue decreases from the Private Label businesses, and also the unfavourable impact of exchange rates.EBITDA for the quarter was $21.3 million or 19.5% of revenues compared to $23.8 million or 22.6% of revenues for the same period in 2011. The EBITDA margin decreased by 3.1% year over year and is largely explained by a decline in the gross margin related to product mix, additional investments in marketing in the retail branded segment and the euro/US dollar exchange rate with an unfavourable impact of $0.9 million.Net earnings attributable to shareholders were $12.2 million for the second quarter in 2012 compared to $14.4 million in 2011, while net earnings per share ("EPS") on a diluted basis were $0.36 per share, as compared to $0.44 per share for the same period in 2011. The adjusted diluted EPS were $0.38 in 2012 compared to diluted EPS of $0.44 in 2011.Cash flows from operating activities before changes in non-cash working capital items, interest expenses and restructuring costs were $17.8 million, compared to $18.9 million in 2011. As at June 30, 2012, the Company had a total debt of $281.4 million and a cash position of $11.6 million.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 2012 second quarter results on August 10, 2012 at 8:30 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 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 MeasuresThe 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 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 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.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, 2012$ 2011$ Change      Revenues109.5 105.2 4%      Gross profit(1)55.8 54.9   51.0% 52.2%        EBITDA(2)21.3 23.8 -11% 19.5% 22.6%        Net earnings attributable to shareholders12.2 14.4 -15%      Diluted net earnings per share0.36 0.44 -18%Reconciliation to non IFRS Financial Data     Net earnings attributable to shareholders 12.2  14.4  Interest expenses for acquisition-related contingent liabilities- 0.1  Adjusted net earnings under non-IFRS12.2 14.5 -16%      Adjusted diluted net earnings per share under non-IFRS (3)0.38 0.44 -14%            Consolidated results for the six-month period ended June 30, 2012$ 2011$ Change      Revenues219.4 212.9 3%      Gross profit(1)114.5 115.7   52.2% 54.3%        EBITDA(2)44.1 47.2 -7% 20.1% 22.2%        Net earnings attributable to shareholders23.9 28.6 -16%      Diluted net earnings per share0.68 0.86 -21%Reconciliation to non IFRS Financial Data     Net earnings attributable to shareholders 23.9 28.6  Provision for restructuring costs, net of related taxes2.9 -  Interest expenses for acquisition-related contingent liabilities0.1 0.1  Adjusted net earnings under non-IFRS26.9 28.7 -6%      Adjusted diluted net earnings per share under non-IFRS (3)0.84 0.86 -2%(1)Gross profit means sales less cost of sales.(2)EBITDA means earnings before interest, taxes, depreciation, amortization, restructuring and acquisition-related costs.(3)Without giving the dilutive effect of the convertible debentures.Atrium Innovations Inc.Consolidated Balance Sheets(Expressed in thousands of US dollars)     As at June 30, As at December 31, 2012$ 2011$Assets       Current assets   Cash11,638 22,800Accounts receivable55,859 52,189Income taxes recoverable7,803 5,841Inventory97,611 93,250Prepaid expenses6,750 4,588 179,661 178,668    Property, plant and equipment 24,374 23,296Deferred charges and others4,061 4,218Intangible assets 258,285 257,853Goodwill353,286 356,275Deferred tax assets2,262 5,634 821,929 825,944Liabilities       Current liabilities   Accounts payable and accrued liabilities42,669 44,122Provision2,869 -Contingent considerations951 15,234Income taxes914 1,263Deferred revenues287 157Derivative financial instruments- 704Current portion of long-term debt347 292 48,037 61,772    Contingent considerations- 479Long-term debt191,069 191,169Convertible debentures 89,989 91,819Deferred revenues - 75Derivative financial instruments193 -Deferred tax liabilities65,132 67,056     394,420 412,370Equity   Share capital89,132 91,658Stock options reserve2,705 2,394Retained earnings354,090 337,201Accumulated other comprehensive loss (18,403) (17,706) 427,524 413,547Non-controlling interest(15) 27 427,509 413,574 821,929 825,944Atrium Innovations Inc.Consolidated Statements of Earnings(tabular amounts in thousands of US dollars, except share and per share data)         Quarters ended June 30, Six months ended June 30,         2012$ 2011$ 2012$ 2011$        Revenues109,467 105,161 219,419 212,913        Operating expenses       Cost of sales53,647 50,272 104,933 97,227Selling and administrative expenses36,404 32,185 74,117 70,780Research and development costs626 566 1,293 1,135Restructuring costs- - 4,000 -         90,677 83,023 184,343 169,142        Earnings from operations18,790 22,138 35,076 43,771        Other revenues (expenses)       Financial revenues134 69 199 115Financial expenses(3,621) (2,744) (7,253) (4,743)Foreign exchange gain (loss)(22) (45) 439 (242)Change in fair value of embedded derivative539 - 2,461 -         (2,970) (2,720) (4,154) (4,870)        Earnings before income taxes15,820 19,418 30,922 38,901        Income tax expense3,619 4,728 7,100 9,797        Net earnings for the period12,201 14,690 23,822 29,104                Net earnings for the period attributable to       Shareholders12,151 14,446 23,864 28,561Non-controlling interest50 244 (42) 543        Net earnings per share       Basic0.39 0.44 0.75 0.87Diluted0.36 0.44 0.68 0.86        Weighted average number of shares outstanding (000's)       Basic31,456 32,723 31,737 32,749Diluted35,719 33,107 36,001 33,157Atrium Innovations Inc.Consolidated Statements of Cash Flows(expressed in thousands of US dollars)         Quarters ended June 30, Six months ended June 30,         2012$ 2011$ 2012$ 2011$Cash flows from operating activities       Net earnings for the period12,201 14,690 23,822 29,104        Adjustments for:        Depreciation and amortization2,501 1,647 5,032 3,385 Deferred charges285 212 498 259 Deferred revenues40 (379) 52 (698) Change in fair value of embedded derivative(539) - (2,461) - Stock-based compensation costs131 199 311 288 Interest expense3,255 2,447 6,497 4,058 Deferred income taxes210 71 1,342 1,340 Foreign exchange gain on long-term debt835 - 749 -Change in non-cash operating working capital items(5,154) 1,748 (10,737) (11,607)        Cash flows from operating activities13,765 20,635 25,105 26,129        Cash flows from financing activities       Increase in long-term debt- 187 12,090 232,898Payments on long-term debt(7,885) (12,699) (7,970) (225,602)Financing costs(60) (239) (84) (428)Issuance of shares- 159 - 347Shares redeemed and cancelled under a normal course issuer bid(456) (1,661) (9,501) (3,250)Interest paid(1,613) (2,011) (6,349) (3,218)        Cash flows from (used in) financing activities(10,014) (16,264) (11,814) 747        Cash flows from investing activities       Business acquisitions, net of cash acquired- (3,642) (14,809) (16,265)Purchase of property, plant and equipment(2,047) (1,238) (3,665) (1,697)Proceeds from disposal of property, plant and equipment225 - 225 -Additions to intangible assets(3,730) (2,930) (5,620) (5,031)        Cash flows used in investing activities(5,552) (7,810) (23,869) (22,993)         (1,801) (3,439) (10,578) 3,883        Effect of exchange rate changes on cash(649) 184 (584) (889)        Increase (decrease) in cash(2,450) (3,255) (11,162) 2,994        Cash - Beginning of period14,088 18,298 22,800 12,049        Cash - Ending of period11,638 15,043 11,638 15,043 SOURCE: ATRIUM INNOVATIONS INC.For further information: Investor Relations: Mario Paradis Vice President and Chief Financial OfficerTel.: 418 652-1116 Media Relations: Amélie Germain Director of CommunicationsTel.: 418 652-1116  Pierre Boucher MaisonBrison Communications Tel.: 514 731-0000, ext. 237