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Atrium Innovations Announces 2012 First Quarter Financial Results

May 14, 2012

Solid Performance of Health Food Stores and Healthcare Practitioners,
and Restructuring Being Undertaken to Enhance Profitability in Europe

QUEBEC CITY, May 14, 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 March 31, 2012.

First Quarter 2012 Highlights:
(All amounts are in US dollars.)

        --  Total revenue growth of 2.0% over last year, or 3.2% on a
            currency-neutral basis, all organic, to reach $110.0 million
        --  Total branded revenue organic growth of 5.1%
        --  EBITDA of $22.8 million or 20.8% of revenue, in line with
            expectations
        --  Implementation of a comprehensive restructuring plan totalling
            $4 million to streamline and optimize European operations, and
            to align the cost structure to current economic and market
            conditions
        --  Adjusted diluted EPS of $0.46 for the quarter
        --  Cash flows before working capital, interest and after-tax
            restructuring costs were up 5.5% to $19.9 million
        --  Repurchased 829,776 shares during the quarter under our NCIB
            program

“We are pleased with our organic growth for the quarter despite expected
lower revenues in some of our business segments year over year. The
U.S. market has been particularly strong, reflecting the strength and
dynamism of our Healthcare Practitioner (HCP) and Health Food Store
(HFS) platforms. In Europe, revenues of Wobenzym in Germany grew by
5.0% following refocused sales and marketing efforts. The first quarter
EBITDA margin of 20.8% represented a slight sequential improvement over
the fourth quarter of 2011, and we continue to be committed to
gradually improve our EBITDA margins. We have taken measures to improve
our operating efficiencies in the U.S. and to right-size our resources
and facilities in Europe with the comprehensive restructuring plan
currently being implemented. The benefits of these initiatives will be
progressive throughout the year and will provide a short payback.
However the solid growth of our HFS business, which operates in a
segment with lower EBITDA margins, will continue to impact our overall
margins. Additionally, we are committed to improving organic growth by
focusing and leveraging a select group of brands on a world-wide basis
and to continue to make acquisitions on a selective basis,” said Pierre
Fitzgibbon, President and Chief Executive Officer of Atrium.

For the quarter ended March 31, 2012, Atrium recorded revenues of $110.0
million representing an increase of 2.0% (3.2% on a currency-neutral
basis) compared to revenues of $107.8 million in 2011. The increase,
all organic, is mainly attributable to the solid performance of the HCP
and HFS channels in North America, with organic growth of 8% and 15%,
respectively, and improved sales in Germany, with a growth of 5%, and
is partially offset by revenue decreases in other European regions and
CMO business, and also the unfavourable impact of exchange rates.

EBITDA for the quarter was $22.8 million or 20.8% of revenues compared
to $23.4 million or 21.7% of revenues for the same period in 2011. The
EBITDA margin decreased by 0.9% year over year and is largely explained
by a decline in the gross margin related to product mix partly offset
by a decrease in selling and administrative expenses, as marketing
expenses in Europe were higher last year.

Net earnings attributable to shareholders were $11.7 million for the
first quarter in 2012 compared to $14.1 million in 2011, while net
earnings per share (“EPS”) on a diluted basis were $0.32 per share, as
compared to $0.43 per share for the same period in 2011. Adjusted net
earnings (without giving effect to the one-time restructuring costs and
the dilutive effect of the convertible debenture) were $14.7 million
for the first quarter in 2012 compared to $14.2 million in 2011 and
adjusted diluted EPS were $0.46 in 2012 compared to diluted EPS of
$0.43 in 2011.

Cash flows from operating activities before changes in non-cash working
capital items, interest expenses and after-tax restructuring costs were
$19.9 million, an increase of 5.5% compared to $18.8 million in 2011.
As at March 31, 2012, the Company had a total debt of $301.0 million
and a cash position of $14.1 million.

During the quarter, under its normal course issuer bid (NCIB) program,
the Company repurchased and cancelled 829,776 common shares for a total
consideration of $9.0 million. Furthermore, 61,292 shares were
repurchased during the month of April and the number of outstanding
shares currently stands at 31,456,478, representing a 4.8% reduction in
comparison to when the NCIB program was first launched in November of
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 2012 first quarter results on May 15, 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 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 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 quarters ended
    March 31,

                                                   2012    2011   Change
                                                      $       $

    Revenues                                      110.0   107.8       2%

    Gross profit (1)                               58.7    60.8         

                                                  53.4%   56.4%         

    EBITDA (2)                                     22.8    23.4      -3%

                                                  20.8%   21.7%         

    Net earnings                                   11.7    14.1     -17%

    Diluted net earnings per share                 0.32    0.43     -26%

    Reconciliation to non IFRS Financial Data                           

    Net earnings                                   11.7    14.1    

    Provision for restructuring costs, net of
    related taxes                                   2.9       -

    Interest expenses for acquisition-related
    contingent liabilities                          0.1     0.1

    Adjusted net earnings under non-IFRS           14.7    14.2       4%

    Adjusted diluted net earnings per share under
    non-IFRS(3)                                    0.46    0.43       7%

    (1) Gross profit means sales less cost of goods sold.

    (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 March31,    As atDecember 31,

                                                2012                 2011
                                                   $                    $

    Assets                                                               

    Current assets                                                       

    Cash                                      14,088               22,800

    Accounts receivable                       53,777               52,189

    Income taxes recoverable                   8,120                5,841

    Inventory                                 97,395               93,250

    Prepaid expenses                           5,518                4,588

                                             178,898              178,668

    Property, plantand equipment              24,349               23,296

    Deferredcharges and others                 4,263                4,218

    Intangibleassets                         263,345              257,853

    Goodwill                                 361,677              356,275

    Deferred tax assets                        3,528                5,634

                                             836,060              825,944

    Liabilities                                                          

    Currentliabilities                                                   

    Accounts payable and accrued              41,623               44,122
    liabilities

    Provision                                  4,000                    -

    Contingent considerations                    499               15,234

    Income taxes                                 574                1,263

    Deferred revenues                            190                  157

    Derivative financial instruments             472                  704

    Current portion of long-term debt            350                  292

                                              47,708               61,772

    Contingent considerations                    494                  479

    Long-term debt                           208,592              191,169

    Convertible debentures                    92,070               91,819

    Deferred revenues                             57                   75

    Deferred tax liabilities                  66,869               67,056

                                             415,790              412,370

    Equity                                                               

    Share capital                             89,307               91,658

    Stock options reserve                      2,574                2,394

    Retained earnings                        342,220              337,201

    Accumulated other comprehensive         (13,766)             (17,706)
    loss

                                             420,335              413,547

    Non-controlling interest                    (65)                   27

                                             420,270              413,574

                                             836,060              825,944


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

                                                  Quarters ended March 31,

                                                     2012             2011
                                                        $                $

    Revenues                                      109,952          107,752

    Operating expenses                                                    

    Cost of sales                                  51,286           46,955

    Selling and administrative expenses            37,713           38,595

    Research and development costs                    667              569

    Restructuring costs                             4,000                -

                                                   93,666           86,119

    Earnings from operations                       16,286           21,633

    Other revenues (expenses)                                             

    Financial revenues                                 65               46

    Financial expenses                            (3,632)          (1,999)

    Foreign exchange gain (loss)                      461            (197)

    Change in fair value of embedded derivative     1,922                -

                                                  (1,184)          (2,150)

    Earnings before income taxes                   15,102           19,483

    Income tax expense                              3,481            5,069

    Net earnings for the period                    11,621           14,414

    Net earnings for the period attributable to                           

    Shareholders                                   11,713           14,115

    Non-controlling interest                         (92)              299

    Net earnings per share                                                

    Basic                                            0.37             0.43

    Diluted                                          0.32             0.43

    Weighted average number of shares outstanding
    (000's)

    Basic                                          32,018           32,774

    Diluted                                        36,283           33,203


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

                                                     Quarters EndedMarch31,

                                                         2012          2011
                                                            $             $

    Cash flows from operating activities                                   

    Net earnings for the period                        11,621        14,414

    Adjustments for:                                                       

      Depreciation and amortization                     2,531         1,738

      Deferred charges                                    213            47

      Deferred revenues                                    12         (319)

      Change in fair value of embedded derivative     (1,922)             -

      Stock-based compensation costs                      180            89

      Interest expense                                  3,242         1,611

      Deferred income taxes                             1,132         1,269

      Foreign exchange gain on long-term debt            (86)             -

    Change in non-cash operating working capital      (5,583)      (13,355)
    items

    Cash flows from operating activities               11,340         5,494

    Cash flows from financing activities                                   

    Increase in long-term debt                         12,090       232,711

    Payments on long-term debt                           (85)     (212,903)

    Financing costs                                      (24)         (189)

    Issuance of shares                                      -           188

    Shares redeemed and cancelled under a normal      (9,045)       (1,589)
    course issuer bid

    Interest paid                                     (4,736)       (1,207)

    Cash flows from (used in) financing               (1,800)        17,011
    activities

    Cash flows from investing activities                                   

    Business acquisitions, net of cash acquired      (14,809)      (12,623)

    Purchase of property, plant and equipment         (1,618)         (459)

    Additions to intangible assets                    (1,890)       (2,101)

    Cash flows used in investing activities          (18,317)      (15,183)

                                                      (8,777)       (7,322)

    Effect of exchange rate changes on cash                65       (1,073)

    Increase (decrease) in cash                       (8,712)         6,249

    Cash - Beginning of period                         22,800        12,049

    Cash - Ending of period                            14,088        18,298

 

SOURCE ATRIUM INNOVATIONS INC.


Source: PR Newswire