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Press release from PR Newswire

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, 2012 Strong Organic Revenue Growth, Best Quarter since 2008 QUEBEC CITY, Nov. 7, 2012 /PRNewswire/ - 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 million Total branded revenue recorded solid organic growth of 13%, on a currency-neutral basis EBITDA of $21.3 million or 19.8% of revenue, a decline mostly related to a lower Euro/USD exchange rate Adjusted diluted EPS of $0.42 for the quarter, a slight increase of 2% over last year despite the unfavourable exchange rate Cash flows before working capital and interest remain strong at $18.3 million Closure of British Columbia manufacturing facility completed as planned First 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 Innovations Atrium 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 www.atrium-innovations.com. Conference Call and Webcast Atrium 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 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 financial statements will also be available on the Company's website. Caution Regarding Non-IFRS Financial Measures The 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 Statements This 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 Summary Balance 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,     2012 $   2011 $   Change             Revenues 107.6   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 shareholders 13.4   13.4   -             Diluted net earnings per share 0.40   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-IFRS 13.4   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             Revenues 327.0   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 shareholders 37.3   41.9   -11%             Diluted net earnings per share 1.09   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 taxes 2.9   -     Interest expenses for acquisition-related contingent liabilities 0.1   0.2     Adjusted net earnings under non-IFRS 40.3   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     Cash 13,740 22,800 Accounts receivable 55,162 52,189 Income taxes recoverable 5,551 5,841 Inventory 100,698 93,250 Prepaid expenses 7,868 4,588   183,019 178,668       Property, plant and equipment 24,089 23,296 Deferred charges and others 4,052 4,218 Intangible assets 263,120 257,853 Goodwill 358,241 356,275 Deferred tax assets 2,283 5,634   834,804 825,944 Liabilities           Current liabilities     Accounts payable and accrued liabilities 35,251 44,122 Provision 1,344 - Contingent considerations - 15,234 Income taxes 501 1,263 Deferred revenues 214 157 Derivative financial instruments - 704 Current portion of long-term debt 362 292   37,672 61,772       Contingent considerations - 479 Long-term debt 191,573 191,169 Convertible debentures 93,080 91,819 Deferred revenues - 75 Derivative financial instruments 1,270 - Deferred tax liabilities 66,728 67,056         390,323 412,370 Equity     Share capital 89,132 91,658 Stock options reserve 2,810 2,394 Retained earnings 367,492 337,201 Accumulated other comprehensive loss (15,001) (17,706)   444,433 413,547 Non-controlling interest 48 27   444,481 413,574   834,804 825,944       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   142,001 Selling and administrative expenses   35,099   31,130   109,216   101,910 Research and development costs   468   902   1,761   2,037 Restructuring 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   207 Financial 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   41,912 Non-controlling interest   63   71   21   614                   Net earnings per share                 Basic   0.43   0.41   1.18   1.28 Diluted   0.40   0.38   1.09   1.24                   Weighted average number of shares outstanding (000's)                 Basic   31,456   32,622   31,644   32,706 Diluted   35,719   35,675   35,907   33,995 Atrium 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   236,976 Payments on long-term debt   (2,088)   (101,155)   (10,058)   (326,757) Proceed from the issuance of convertible debentures   -   101,081   -   101,081 Financing costs   (5)   (4,044)   (89)   (4,472) Issuance of shares   -   -   -   347 Shares 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: <p> </p> <p> <b>Investor Relations</b>: <br/> Mario Paradis <br/> Vice President and Chief Financial Officer <br/> <b>Tel.: 418 652-1116</b> <br/> <a href="mailto:mp@atrium-innovations.com" cr="true">mp@atrium-innovations.com</a>  </p> <p> Pierre Boucher<br/> MaisonBrison Communications<br/> Tel.: 514 731-0000, ext. 237<br/> <a href="mailto:pierre@maisonbrison.com" cr="true">pierre@maisonbrison.com</a><b> </b><br/> <br/> <b>Media Relations:</b><br/> Amélie Germain<br/> Director of Communications<br/> <b>Tel.: 418 652-1116</b> <b> </b><br/> <a href="mailto:ag@atrium-innovations.com" font-weight="bold">ag@atrium-innovations.com</a> <br/> <br/> <br/> <br/> </p>