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Atrium Innovations Announces 2011 Fourth Quarter and Full Year Financial Results

February 29, 2012

Continued Growth and Record Results in 2011

QUEBEC CITY, Feb. 29, 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 2011 full year and fourth quarter results for the period ended
December 31, 2011.

2011 and Subsequent Year-End  Highlights:
(All amounts are in US dollars.)

        --  Revenue growth of 16.3% over previous year to reach $414.7
            million
        --  EBITDA of $91.0 million or 21.9% of revenues, an increase of
            8.5% compared to last year
        --  Adjusted diluted EPS of $1.70 for the year, an increase of
            18.1% over last year
        --  Cash flows before working capital and interest were up 22.3% to
            $75.1 million
        --  Closing of CAN$100 million issue of 7-year convertible
            debentures
        --  Renewal of bank credit facility for a period of 3 years
        --  German Court ruled in favour of maintaining OTC drug status of
            Phlogenzym®
        --  US District Court ruled in favour of GOL in its proceeding
            against FTC

“We are generally pleased with Atrium’s results in 2011 which have
reached record levels.  Our branded business performed particularly
well in the U.S. in both the Healthcare Practitioner and Health Food
Store markets.  We completed the restructuring of our Direct to
Consumer business, an important component for our organic growth going
forward.  Our Canadian and Dutch operations expanded modestly as growth
in those respective markets was restrained in 2011. Last December, in
Germany, the Federal Administrative Court ruled in favour of
maintaining the OTC drug status of Phlogenzym®, part of the Wobenzym
family of products.  As a result, more marketing emphasis will be
placed on our animal enzymes OTC drug product going forward.  We have
stabilized our revenue base in Germany and are confident that we can
gradually rebuild from the current level with this recent decision”
said President and Chief Executive Officer, Pierre Fitzgibbon.

“2011 proved to be a year of important changes for Atrium.  After
completing a series of strategic acquisitions in the last few years,
the time was right to alter our management structure and thereby
optimize our business platform with increased emphasis on organic
growth.  We appointed a Head of Operations in both North America and
Europe, and welcomed new corporate executives. This team will provide
us with a structure precisely tailored to maximize our synergies and
build an effective platform.  Atrium’s new ERP system implementation
will be central to the new platform in North America.  In this era of
enhanced regulation, Atrium is advantageously positioned to reap the
benefits of an industry which is increasingly gaining legitimacy and
credibility,” concluded Mr. Fitzgibbon.

For the fiscal year ended December 31, 2011, Atrium recorded revenues of
$414.7 million representing an increase of 16.3% compared to revenues
of $356.6 million in 2010. This increase is mainly attributable to the
acquisition of Seroyal, as well as to organic growth of North American
branded business and to the favourable impact of exchange rates.

EBITDA increased by 8.5% to $91.0 million or 21.9% of revenues compared
to $83.9 million or 23.5% of revenues for the same period in 2010. This
EBITDA increase came largely from the acquisition of Seroyal.

Net earnings attributable to shareholders were $55.9 million in 2011
compared to $47.9 million in 2010, representing an increase of
16.7%. Net earnings per share (“EPS”) on diluted basis rose to $1.61
per share, as compared to $1.44 per share for the same period in 2010.
Without giving the dilutive effect of the potential conversion of the
convertible debentures, the adjusted diluted EPS would have been $1.70
in 2011 compared to diluted EPS of $1.44 in 2010.

Cash flows from operating activities before changes in non-cash working
capital items and interest expenses were $75.1 million, an increase of
22.3% compared to $61.4 million in 2010. As at December 31, 2011, the
Company had a total debt of $283.3 million and a cash position of $22.8
million. During the year, the Company announced the closing of a 7-year
convertible debenture offering of CAN$100 million.  The net proceeds
were used to reduce the Company’s outstanding indebtedness.

During the year, primarily under its NCIB (Normal Course Issuer Bid)
program, the Company repurchased and cancelled 697,794 common shares
for a total consideration of $9.3 million (401,386 common shares and
$4.8 million in the fourth quarter of 2011). Furthermore, 79,510 shares
were repurchased in January 2012.

“In 2011, we increased our financial flexibility and further optimized
our capital structure via a convertible debenture financing and a new
bank credit facility in place for a period of three years. In addition,
considering our solid cash flow, we continue to repurchase our shares
at levels which we consider very attractive for the long-term benefit
of our shareholders,” said Mario Paradis, Vice President and CFO.

Financial Results for the Fourth Quarter of 2011

For the fourth quarter ended December 31, 2011, Atrium recorded revenues
of $104.8 million representing an increase of 13.3% compared to $92.5
million for the corresponding period in 2010.  The increase is mainly
attributable to the acquisition of Seroyal and to organic growth of
branded products.

EBITDA for the fourth quarter of 2011 was $21.7 million or 20.7% of
revenue compared to $21.2 million or 22.9% of revenues for the same
period in 2010.  Net earnings attributable to shareholders were $14.0
million in 2011 compared to $10.5 million in 2010, representing an
increase of 33.3%.  EPS for the quarter was $0.37 per diluted share
compared to $0.31 per diluted share in 2010.  Without giving the
dilutive effect of the potential conversion of the convertible
debentures, the adjusted diluted EPS would have been $0.43 in 2011
compared to $0.31 in 2010.

Cash flows from operating activities before changes in non-cash working
capital items and interest expenses were $21.1 million in 2011 compared
to $13.8 million in 2010.

About Atrium

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
eight 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 2011 fourth quarter and full year results on March 1, 2012 at 9:00
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 sales less cost of sales. EBIT means earnings before
interest and tax. EBITDA means earnings before interest, tax,
depreciation, amortization and acquisition costs.

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 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 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 year ended December 31,


                                                      2011    2010   Change
                                                         $       $  

    Revenues                                         414.7   356.6      16%

    Gross profit (1)                                 224.9   203.0         

                                                     54.2%   56.9%         

    EBITDA (2)                                        91.0    83.9       8%

                                                     21.9%   23.5%         

    Net earnings attributableto shareholders          55.9    47.9      17%

    Net earnings per share                                                 

      Diluted                                         1.61    1.44      12%

      Adjusted diluted (3)                            1.70    1.44      18%

    Reconciliation to non IFRS Financial Data                              

    Net earnings attributable to shareholders         55.9    47.9    

      Acquisition-related costs and interest           0.4     2.8
      expenses
      for acquisition-related contingent liabilities
      (after-tax)                                           

    Net earnings                                      56.3    50.7      11%

    Net diluted earnings pershare                     1.62    1.53       6%

    Adjusted diluted earnings per share(3)            1.71    1.53      12%

(1) Gross profit means sales less cost of goods sold.
(2) EBITDA means earnings before interest, taxes, depreciation,
amortization 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 quarters ended December 31,


                                                      2011    2010   Change
                                                         $       $

    Revenues                                         104.8    92.5      13%

    Gross profit (1)                                  57.0    53.4         

                                                     54.4%   57.7%         

    EBITDA (2)                                        21.7    21.2       2%

                                                     20.7%   22.9%         

    Net earnings attributable toshareholders          14.0    10.5      33%

    Net earnings per share                                                 

      Diluted                                         0.37    0.31      19%

      Adjusted diluted (3)                            0.43    0.31      39%

    Reconciliation to non IFRS Financial Data                              

    Net earnings attributable to shareholders         14.0    10.5         

      Acquisition-related costs and interest           0.2     2.9
      expenses
      for acquisition-related contingent liabilities
      (after-tax)                                                   

    Net earnings                                      14.2    13.4       6%

    Net diluted earnings per share                    0.37    0.40     (8%)

    Adjusted diluted earnings per share(3)            0.43    0.40       8%

(1) Gross profit means sales less cost of goods sold.
(2) EBITDA means earnings before interest, taxes, depreciation,
amortization 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)


                                                 2011         2010
                                                    $            $

    Assets                                                        

    Current assets                                                

    Cash                                       22,800       12,049

    Accounts receivable                        52,189       50,070

    Income taxes recoverable                    5,841        5,860

    Inventory                                  93,250       79,243

    Prepaid expenses                            4,588        4,384

                                              178,688      151,606

    Property, plant and equipment              23,296       21,916

    Deferred charges and others                 4,218        3,238

    Intangible assets                         257,853      256,139

    Goodwill                                  356,275      357,199

    Deferred tax assets                         5,634        8,564

                                              825,944      798,662

    Liabilities                                                   

    Current liabilities                                           

    Accounts payable and accrued liabilities   44,122       39,768

    Provision                                       -        3,351

    Contingent considerations                  15,234       17,583

    Income taxes                                1,263        1,471

    Deferred revenues                             157          944

    Derivative financial instruments              704            -

    Current portion of long-term debt             292          217

                                               61,772       63,334

    Contingent considerations                     479       11,877

    Long-termdebt                             191,169      275,614

    Convertibledebentures                      91,819            -

    Deferred revenues                              75          218

    Derivativefinancial instruments                 -        2,256

    Deferred tax liabilities                   67,056       69,503

                                              412,370      422,802

    Equity                                                        

    Sharecapital                               91,658       92,664

    Stock options reserve                       2,394        1,767

    Retained earnings                         337,201      288,607

    Accumulated other comprehensive loss     (17,706)      (6,576)

                                              413,547      376,462

    Non-controlling interest                       27        (602)

                                              413,574      375,860

                                              825,944      798,662

Atrium Innovations Inc.
Consolidated Statements of Earnings
(tabular amounts in thousands of US dollars, except share and per share
data)


                                                  Years ended December31,

                                                      2011           2010
                                                         $              $

    Revenues                                       414,660        356,630

    Operating expenses                                                   

    Cost of sales                                  189,737        153,602

    Selling and administrative expenses            139,711        127,330

    Research and development costs                   2,623          2,021

                                                   332,071        282,953

    Earnings fromoperations                         82,589         73,677

    Other revenues (expenses)                                            

    Financial revenues                                 569            451

    Financial expenses                            (12,484)        (7,343)

    Foreign exchange gain (loss)                     (394)            331

    Change in fair value of embedded derivative      3,013              -

                                                   (9,296)        (6,561)

    Earningsbefore income taxes                     73,293         67,116

    Income tax expense                              16,731         19,198

    Net earnings for the year                       56,562         47,918

    Netearnings for the year attributable to                             

    Shareholders                                    55,933         47,918

    Non-controlling interest                           629              -

    Net earnings per share                                               

    Basic                                             1.71           1.47

    Diluted                                           1.61           1.44

    Weighted average number of shares outstanding
    (000's)

    Basic                                           32,640         32,699

    Diluted                                         34,600         33,208

Atrium Innovations Inc.
Consolidated Statements of Cash Flows
(expressed in thousands of US dollars)


                                                        2011           2010
                                                           $              $

    Cash flows from operating activities                                   

    Net earnings for the year                         56,562         47,918

    Adjustments for:                                                       

      Depreciation and amortization                    8,040          6,782

      Deferred charges                                   998            329

      Deferred revenues                                (946)        (1,367)

      Change in fair value of embedded derivative    (3,013)              -

      Stock-based compensation costs                     692            233

      Interest expense                                10,789          5,947

      Deferred income taxes                            1,968          1,536

      Change in non-cash operating working capital  (17,833)       (23,765)
      items

    Cash flows from operating activities              57,257         37,613

    Cash flows from financingactivities                                    

    Increase in long-term debt                       243,818        139,936

    Payments on long-term debt                     (329,679)       (24,124)

    Proceed from the issuance of convertible         101,081              -
    debentures

    Financing costs                                  (5,829)          (370)

    Issuance of shares                                   887            356

    Shares redeemed and cancelled                    (9,297)              -

    Interest paid                                    (8,101)        (5,029)

    Cash flows from financing activities             (7,120)        110,769

    Cash flowsfrom investing activities                                    

    Business acquisitions, net of cash acquired     (20,515)      (144,837)

    Purchase of property, plant and equipment        (4,594)        (3,976)

    Additions to intangible assets                  (11,046)        (3,785)

    Cash flows from investing activities            (36,155)      (152,598)

                                                      13,982        (4,216)

    Effect of exchange rate changes on cash          (3,231)          (902)

    Increase(decrease) in cash                        10,751        (5,118)

    Cash- Beginning balance                           12,049         17,167

    Cash - Ending balance                             22,800         12,049

 

  

 

SOURCE ATRIUM INNOVATIONS INC.


Source: PR Newswire