Atrium Innovations Announces Third Quarter Financial Results of 2010
Strong performance of Branded Business and Germany improving
QUEBEC CITY, Nov. 10 /CNW Telbec/ - Atrium Innovations Inc. (TSX: ATB), a recognized leading developer, manufacturer and marketer of professionally endorsed, science-based dietary supplements for the health and nutrition industry, today released its financial results for the third quarter of 2010.
Third Quarter Highlights: (All amounts are in US dollars.) - Revenue growth of 9.2% over last year and 4.3% sequentially - Results in Germany improved over the second quarter of 2010 - US Branded Business posted 12% growth this quarter - EBITDA of $21.2 million or 23.9% of revenues
"As anticipated, sales picked up in Germany over the second quarter with the benefit of two new complementary products. In the early part of the fourth quarter, we are satisfied with the continued sales momentum of our family of Wobenzym products in Germany and worldwide," said Pierre Fitzgibbon, President and CEO.
"When compared to 2009, sales for the quarter benefitted primarily from the acquisitions of Garden of Life and Trophic. Industry fundamentals remained healthy and our market positioning and strong product portfolio enabled Atrium to generate solid organic growth.
"With the integration process of recent acquisitions fully completed, we are ready for additional acquisitions. Our current pipeline is very active and could lead to transactions in the near future. For the fourth quarter, we expect moderate sequential revenue growth and a stable EBITDA margin over the third quarter," concluded Mr. Fitzgibbon.
For the third quarter ended September 30, 2010, Atrium recorded revenues of $88.9 million representing an increase of 9.2% compared to revenues of $81.4 million for the corresponding period in 2009. The increase is mainly attributable to the acquisitions of Garden of Life and Trophic. Excluding the negative impact of the euro/US dollar exchange rate when compared to the corresponding period last year, revenues would have increased by 12.8%.
Gross profit for the third quarter was $49.1 million compared to $46.2 million for 2009, an increase of $2.9 million or 6.5%. The increase in gross profit is primarily attributable to the acquisitions of Garden of Life and Trophic. For the third quarter, gross margin decreased from 56.7% in 2009 to 55.3% in 2010. The gross margin decreased due to the less favorable products mix revenues.
EBITDA for the third quarter of 2010 decreased by 1.6% to $21.2 million or 23.9% of revenues compared to $21.6 million or 26.5% of revenues for the same period in 2009. This EBITDA decrease came primarily from a weaker exchange rate of the euro/US dollar which impacted EBITDA by $0.8 million and higher SG&A expenses related to a different weighting of our distribution channels requiring higher levels of sales & marketing expenses. Excluding the impact of the euro/US dollar exchange rate, EBITDA would have increased by 2.1%.
Net earnings for the quarter were $12.8 million compared to $13.1 million in 2009, representing a slight decrease of 2.2%. EPS for the quarter were $0.39 per diluted share compared to $0.40 per diluted share in 2009. This was primarily caused by the negative impact of the euro/US exchange rate.
Cash flows from operating activities before changes in non-cash working capital items were $15.8 million in 2010, an increase of 13% compared to $14.0 million in 2009. As at September 30, 2010, the Company had a total debt of $175.8 million and a cash position of $22.6 million. The Company has a revolving credit facility that provides $300 million of borrowing capacity with no debt refinancing before July 2012.
Normal Course Issuer Bid
In a separate press release issued on November 10, 2010, the Company announced the details of its Normal Course Issuer Bid (NCIB). Under its NCIB, Atrium intends to purchase up to 1,639,617 of its common shares, representing approximately 5% of the 32,792,340 common shares issued and outstanding as of October 31, 2010. The purchases may commence on November 15, 2010 and will terminate on November 14, 2011, or on such earlier date as Atrium will have completed its purchases pursuant to the Notice of Intention to make a NCIB filed with the TSX. "Having a NCIB in place will provide the Company with the flexibility to purchase shares when appropriate and beneficial to our shareholders," said Mario Paradis, CFO.
About Atrium
Atrium Innovations Inc. is a globally recognized leader in the innovation, formulation, production and commercialization of science-based and professionally endorsed dietary supplements for the health & nutrition industry. The Company focuses primarily on growing segments of the health and nutrition markets which are benefiting from the trends towards healthy living and the ageing of the population. Atrium markets a broad portfolio of finished products through its highly specialized sales and marketing network in more than 35 countries, primarily in North America and Europe. Atrium has over 925 employees and operates seven manufacturing facilities. Additional information about Atrium is available on its website at www.atrium-innovations.com.
Conference Call and Webcast
Atrium will hold its quarterly conference call and webcast to discuss its 2010 third quarter results on Thursday, November 11, 2010 at 8:30 a.m., Eastern time. Participants may access the call by using the following numbers: 514 807-9895, 888 231-8191 or 647 427-7450. 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 interim unaudited financial statements will also be available on the Company's website.
Caution Regarding Non-GAAP Measures
This press release is based on reported earnings in accordance with Canadian generally accepted accounting principles (GAAP). It is also based on earnings before interest, income taxes, depreciation and amortization (EBITDA) and gross margin. These measures do not have a standardized meaning prescribed by GAAP; therefore, other issuers using these terms may calculate them differently. Management believes that a significant portion of the users of its Consolidated Financial Statements and MD&A analyze the Company's results based on these performance measures.
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, necessarily involve risks and uncertainties that could cause actual results to differ materially from those contemplated by these forward-looking statements. The Company considers the assumptions on which these forward-looking statements are based to be reasonable, 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. For additional information with respect to these and other factors, see the Company's quarterly and annual filings with the Canadian securities commissions. 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, September 30, June 30, 2010 2009 2010 ------------- ------------- ------------- Revenues 88.9 81.4 85.2 ------------- ------------- ------------- Gross profit(1) 49.1 46.2 48.9 55.3% 56.7% 57.3% EBITDA(2) 21.2 21.6 20.3 23.9% 26.5% 23.8% Net earnings 12.8 13.1 12.5 Net earnings per share Basic 0.39 0.40 0.38 Diluted 0.39 0.40 0.38 Consolidated results for the nine-month period ended September 30, 2010 2009 ------------- ------------- Revenues 264.1 224.6 ------------- ------------- Gross profit(1) 149.6 124.2 56.6% 55.3% EBITDA(2) 62.7 57.8 23.7% 25.7% Net earnings 38.3 34.9 Net earnings per share Basic 1.17 1.07 Diluted 1.15 1.06 (1) Gross profit means sales less cost of goods sold. (2) EBITDA means earnings before interest, income taxes, depreciation and amortization. Atrium Innovations Inc. Consolidated Balance Sheets (expressed in thousands of US dollars) (unaudited) As at As at September 30, December 31, ------------- ------------- 2010 2009 $ $ Assets Current assets Cash and cash equivalents 22,576 17,167 Accounts receivable 43,565 45,100 Income taxes recoverable 4,662 4,904 Inventory 63,889 58,738 Prepaid expenses 4,308 2,045 Future income tax assets 509 741 ------------- ------------- 139,509 128,695 Property, plant and equipment 20,515 17,268 Deferred charges and others 3,084 3,050 Intangible assets 212,348 214,304 Goodwill 254,086 262,832 Future income tax assets 6,626 7,505 ------------- ------------- 636,168 633,654 ------------- ------------- ------------- ------------- Liabilities Current liabilities Accounts payable and accrued liabilities 30,546 43,160 Purchase price adjustment - 22,725 Income taxes 41 272 Deferred revenues 1,277 1,457 ------------- ------------- 31,864 67,614 Long-term debt 175,818 169,891 Future income tax liabilities 57,779 57,536 Deferred revenues 243 1,000 Derivative financial instruments 2,650 2,466 ------------- ------------- 268,354 298,507 ------------- ------------- Shareholders' Equity Share capital 92,356 92,300 Contributed surplus 2,474 2,292 Retained earnings 269,332 231,081 Accumulated other comprehensive income 3,652 9,474 ------------- ------------- 367,814 335,147 ------------- ------------- 636,168 633,654 ------------- ------------- ------------- ------------- Atrium Innovations Inc. Consolidated Statements of Earnings (tabular amounts in thousands of US dollars, except share and per share data) (unaudited) Quarters ended Nine months ended September 30, September 30, ------------------ ------------------ 2010 2009 2010 2009 $ $ $ $ Revenues 88,850 81,393 264,086 224,626 -------- -------- -------- -------- Operating expenses Cost of sales 39,716 35,241 114,504 100,391 Selling and administrative expenses 28,255 24,735 87,282 66,696 Research and development costs 331 525 1,394 1,531 Depreciation and amortization Property, plant and equipment 280 364 1,077 814 Intangible assets 676 757 1,954 2,205 -------- -------- -------- -------- 69,258 61,622 206,211 171,637 -------- -------- -------- -------- Earnings from operations 19,592 19,771 57,875 52,989 -------- -------- -------- -------- Other revenues (expenses) Financial income 2 29 263 224 Financial expenses (1,706) (1,765) (5,063) (5,522) Foreign exchange gain (loss) (297) (127) 362 (552) -------- -------- -------- -------- (2,001) (1,863) (4,438) (5,850) -------- -------- -------- -------- Earnings before the following items 17,591 17,908 53,437 47,139 Income tax expense 4,808 4,837 15,186 12,288 -------- -------- -------- -------- Net earnings of the period 12,783 13,071 38,251 34,851 -------- -------- -------- -------- -------- -------- -------- -------- Net earnings per share Basic 0.39 0.40 1.17 1.07 -------- -------- -------- -------- -------- -------- -------- -------- Diluted 0.39 0.40 1.15 1.06 -------- -------- -------- -------- -------- -------- -------- -------- Weighted average number of shares outstanding (000's) Basic 32,667 32,504 32,667 32,459 -------- -------- -------- -------- -------- -------- -------- -------- Diluted 33,196 33,023 33,201 32,986 -------- -------- -------- -------- -------- -------- -------- -------- Atrium Innovations Inc. Consolidated Statements of Cash Flows (expressed in thousands of US dollars) (unaudited) Quarters Ended Nine months ended September 30, September 30, ------------------ ------------------ 2010 2009 2010 2009 $ $ $ $ Cash flows from operating activities Net earnings of the period 12,783 13,071 38,251 34,851 Items not affecting cash and cash equivalents Depreciation and amortization 1,630 1,792 4,819 4,815 Deferred charges 189 159 119 443 Deferred revenues (351) (566) (970) (1,148) Stock-based compensation costs 45 74 190 280 Future income taxes 1,547 (515) 1,748 (1,603) Change in non-cash operating working capital items 1,176 6,252 (18,304) 3,712 -------- -------- -------- -------- Cash flows from operating activities 17,019 20,267 25,853 41,350 -------- -------- -------- -------- Cash flows from financing activities Increase in long-term debt 1,204 23,803 27,151 77,384 Payments on long-term debt (3,954) (8,029) (13,512) (85,756) Deferred financing costs (37) (46) (106) (209) Issuance of shares - - 48 - -------- -------- -------- -------- Cash flows from financing activities (2,787) 15,728 13,581 (8,581) -------- -------- -------- -------- Cash flows from investing activities Business acquisitions, net of cash and cash equivalents acquired (124) (34,513) (28,392) (51,420) Purchase of property, plant and equipment (742) (630) (2,423) (2,425) Acquisition of intangible assets (2,302) (31) (2,553) (324) -------- -------- -------- -------- Cash flows from investing activities (3,168) (35,174) (33,368) (54,169) -------- -------- -------- -------- Net change of cash and cash equivalents 11,064 821 6,066 (21,400) Effect of exchange rate changes on cash and cash equivalents 516 827 (657) 1,225 -------- -------- -------- -------- Increase (decrease) in cash and cash equivalents 11,580 1,648 5,409 (20,175) Cash and cash equivalents - Beginning of the period 10,996 16,181 17,167 38,004 -------- -------- -------- -------- Cash and cash equivalents - End of the period 22,576 17,829 22,576 17,829 -------- -------- -------- -------- -------- -------- -------- --------
For further information: Investor Relations: Mario Paradis, Vice President and Chief Financial Officer, Tel.: 418 652-1116, [email protected]; Pierre Boucher, MaisonBrison Communications, Tel.: 514 731-0000, ext. 237, [email protected]; Media Relations: Amélie Germain, Director of Communications, Tel.: 418 652-1116, [email protected]
Share this article