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Press release from CNW Group

Atrium Innovations Announces 2012 Third Quarter Financial Results

Wednesday, November 07, 2012

Atrium Innovations Announces 2012 Third Quarter Financial Results16:12 EST Wednesday, November 07, 2012Strong Organic Revenue Growth, Best Quarter since 2008QUEBEC CITY, Nov. 7, 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 September 30, 2012.Third Quarter 2012 Highlights: (All amounts are in US dollars.)Total revenue growth was all organic: 11% over last year, or 14% on a currency-neutral basis, to reach $107.6 millionTotal branded revenue recorded solid organic growth of 13%, on a currency-neutral basisEBITDA of $21.3 million or 19.8% of revenue, a decline mostly related to a lower Euro/USD exchange rateAdjusted diluted EPS of $0.42 for the quarter, a slight increase of 2% over last year despite the unfavourable exchange rateCash flows before working capital and interest remain strong at $18.3 millionClosure of British Columbia manufacturing facility completed as plannedFirst time launch of a new brand - Klean Athlete™"The results for the third quarter were in line with Management's outlook and reflect the continued focus and priority placed on organic growth across all our brands. Total branded revenue growth of 13% for the quarter over last year represents our best performance in over 4 years. The exceptional performance of Retail Branded in North America must be highlighted with growth of just over 40% over 2011. While total revenues in Europe were under pressure due to difficult economic conditions in the Netherlands, we continue to be pleased with our of Wobenzym® sales in Germany as Wobenzym® Plus continues to enjoy sell-out increases over last year," said Pierre Fitzgibbon, President and CEO."Our EBITDA margin improved slightly over the second quarter of 2012 to 19.8% and stands at 20.0% year-to-date. We expect the EBITDA margin to remain relatively stable in the fourth quarter when compared with the third quarter."In the quarter, Douglas Laboratories® introduced a new brand, Klean Athlete, targeting a new high growth category ("sports nutrition") for Atrium. We made the decision to address the sports nutrition market via the development of an internal brand rather than through an acquisition. So far, the market reception has been very positive."Our industry continues to grow at a healthy pace. We are well positioned to take advantage of it, and our commitment to improving revenue from organic growth is showing tangible results. We will focus throughout 2013 on optimizing our U.S. manufacturing environment as we complete the implementation of our ERP program", concluded Mr. Fitzgibbon.For the quarter ended September 30, 2012, Atrium recorded revenues of $107.6 million representing an increase of 11% (14% on a currency-neutral basis) compared to revenues of $97.0 million in 2011. The increase, all organic, is mainly attributable to the solid performance of our branded products with organic growth of 13% including solid momentum of HCP and HFS brands and also to the private label products.EBITDA for the quarter was $21.3 million or 19.8% of revenues compared to $22.4 million or 23.1% of revenues for the same period in 2011. The EBITDA decreased by $1.1 million year over year largely explained by the unfavourable euro/USD exchange rate with an impact of $0.8 million.Net earnings attributable to shareholders were $13.4 million for the third quarter in 2012 compared to $13.4 million in 2011, while net earnings per share ("EPS") on a diluted basis were $0.40 per share, as compared to $0.38 per share for the same period in 2011. The adjusted diluted EPS were $0.42 in 2012 compared to adjusted diluted EPS of $0.41 in 2011.Cash flows from operating activities before changes in non-cash working capital items and interest expenses were $18.3 million compared to $19.2 million in 2011. As at September 30, 2012, the Company had a total debt of $285.0 million and a cash position of $13.7 million."Over the past four quarters, we have taken advantage of what we believe is an attractive valuation of our shares to use our Normal Course Issuer bid (NCIB) program and thereby reduce the number of outstanding shares by over 1.2 million to the benefit of our shareholders. Considering our solid and stable cash flows, we remain comfortable with our balance sheet and debt level," said Mario Paradis, Vice President and CFO.About Atrium InnovationsAtrium 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 seven manufacturing facilities.  Additional information is available at Call and WebcastAtrium will hold its quarterly conference call and webcast to discuss its 2012 third quarter results on November 8, 2012 at 8:00 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 revenue less cost of sales. EBIT means earnings before interest and tax.  EBITDA means earnings before interest, tax, depreciation, amortization, restructuring and acquisition costs. Adjusted EPS means EPS without giving the dilutive effect of the convertible debentures. 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 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 September 30,  2012$ 2011$ Change      Revenues107.6 97.0 +11%      Gross profit(1)54.5 52.2   50.7% 53.8%        EBITDA(2)21.3 22.4 -5% 19.8% 23.1%        Net earnings attributable to shareholders13.4 13.4 -      Diluted net earnings per share0.40 0.38 +5%      Reconciliation to non IFRS Financial Data           Net earnings attributable to shareholders 13.4 13.4  Interest expenses for acquisition-related contingent liabilities- 0.1  Adjusted net earnings under non-IFRS13.4 13.5 -      Adjusted diluted net earnings per share under non-IFRS (3)0.42 0.41 +2%      (1) Gross profit means revenue 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.Financial Summary (unaudited)(in millions of US dollars except per share amounts)      Consolidated results for the nine-month period ended September 30,  2012$ 2011$ Change      Revenues327.0 309.9 +6%      Gross profit(1)169.0 167.9   51.7% 54.2%        EBITDA(2)65.4 69.6 -6% 20.0% 22.5%        Net earnings attributable to shareholders37.3 41.9 -11%      Diluted net earnings per share1.09 1.24 -12%      Reconciliation to non IFRS Financial Data           Net earnings attributable to shareholders 37.3 41.9  Provision for restructuring costs, net of related taxes2.9 -  Interest expenses for acquisition-related contingent liabilities0.1 0.2  Adjusted net earnings under non-IFRS40.3 42.1 -4%      Adjusted diluted net earnings per share under non-IFRS (3)1.26 1.27 -1% (1) Gross profit means revenue 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 September 30,As at December 31, 2012$2011$Assets     Current assets  Cash13,74022,800Accounts receivable55,16252,189Income taxes recoverable5,5515,841Inventory100,69893,250Prepaid expenses7,8684,588 183,019178,668   Property, plant and equipment 24,08923,296Deferred charges and others4,0524,218Intangible assets 263,120257,853Goodwill358,241356,275Deferred tax assets2,2835,634 834,804825,944Liabilities     Current liabilities  Accounts payable and accrued liabilities35,25144,122Provision1,344-Contingent considerations-15,234Income taxes5011,263Deferred revenues214157Derivative financial instruments-704Current portion of long-term debt362292 37,67261,772   Contingent considerations-479Long-term debt191,573191,169Convertible debentures 93,08091,819Deferred revenues -75Derivative financial instruments1,270-Deferred tax liabilities66,72867,056    390,323412,370Equity  Share capital89,13291,658Stock options reserve2,8102,394Retained earnings367,492337,201Accumulated other comprehensive loss (15,001)(17,706) 444,433413,547Non-controlling interest4827 444,481413,574 834,804825,944   Atrium Innovations Inc.Consolidated Statements of Earnings(tabular amounts in thousands of US dollars, except share and per share data)   Quarters ended September 30, Nine months ended September 30,           2012$ 2011$ 2012$ 2011$         Revenues 107,621 96,988 327,040 309,901         Operating expenses        Cost of sales 53,110 44,774 158,043 142,001Selling and administrative expenses 35,099 31,130 109,216 101,910Research and development costs 468 902 1,761 2,037Restructuring costs - - 4,000 -           88,677 76,806 273,020 245,948         Earnings from operations 18,944 20,182 54,020 63,953         Other revenues (expenses)        Financial revenues 79 92 278 207Financial expenses (3,232) (3,674) (10,485) (8,417)Foreign exchange gain (loss) 549 (102) 988 (344)Change in fair value of embedded derivative 449 665 2,910 665           (2,155) (3,019) (6,309) (7,889)         Earnings before income taxes 16,789 17,163 47,711 56,064         Income tax expense 3,324 3,741 10,424 13,538                  Net earnings for the period 13,465 13,422 37,287 42,526                  Net earnings for the period attributable to        Shareholders 13,402 13,351 37,266 41,912Non-controlling interest 63 71 21 614         Net earnings per share        Basic 0.43 0.41 1.18 1.28Diluted 0.40 0.38 1.09 1.24         Weighted average number of shares outstanding (000's)        Basic 31,456 32,622 31,644 32,706Diluted 35,719 35,675 35,907 33,995Atrium Innovations Inc.Consolidated Statements of Cash Flows(expressed in thousands of US dollars)   Quarters ended September 30, Nine months ended September 30,           2012$ 2011$ 2012$ 2011$Cash flows from operating activities        Net earnings for the period 13,465 13,422 37,287 42,526         Adjustments for:         Depreciation and amortization 2,373 2,053 7,405 5,438 Deferred charges 274 399 772 658 Deferred revenues (78) (84) (26) (782) Change in fair value of embedded derivative (449) (665) (2,910) (665) Stock-based compensation costs 105 208 416 496 Interest expense 2,892 3,166 9,389 7,224 Deferred income taxes 512 731 1,854 2,071 Foreign exchange gain on long-term debt (799) - (50) -Change in non-cash operating working capital items (6,842) (7,714) (17,579) (19,321)         Cash flows from operating activities 11,453 11,516 36,558 37,645         Cash flows from financing activities        Increase in long-term debt - 4,078 12,090 236,976Payments on long-term debt (2,088) (101,155) (10,058) (326,757)Proceed from the issuance of convertible debentures - 101,081 - 101,081Financing costs (5) (4,044) (89) (4,472)Issuance of shares - - - 347Shares redeemed and cancelled under a normal course issuer bid - (1,362) (9,501) (4,612)Interest paid (4,023) (1,686) (10,372) (4,904)         Cash flows used in financing activities (6,116) (3,088) (17,930) (2,341)         Cash flows from investing activities        Business acquisitions, net of cash acquired (951) (4,250) (15,760) (20,515)Purchase of property, plant and equipment (794) (925) (4,459) (2,622)Proceeds from disposal of property, plant and equipment - - 225 -Additions to intangible assets (1,433) (3,151) (7,053) (8,182)         Cash flows used in investing activities (3,178) (8,326) (27,047) (31,319)           2,159 102 (8,419) 3,985         Effect of exchange rate changes on cash (57) (1,485) (641) (2,374)         Increase (decrease) in cash 2,102 (1,383) (9,060) 1,611         Cash - Beginning of period 11,638 15,043 22,800 12,049         Cash - Ending of period 13,740 13,660 13,740 13,660           SOURCE: ATRIUM INNOVATIONS INC.For further information: Investor Relations:  Mario Paradis  Vice President and Chief Financial Officer Tel.: 418 652-1116  Pierre Boucher MaisonBrison Communications Tel.: 514 731-0000, ext. 237 Media Relations: Amélie Germain Director of CommunicationsTel.: 418 652-1116