Atrium Innovations Announces 2012 Second Quarter Financial Results

Published: Aug 10, 2012

Solid Organic Growth Performance

QUEBEC CITY, Aug. 9, 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 June 30, 2012.

Second Quarter 2012 Highlights:

(All amounts are in US dollars.)

  • Total revenue growth of 4.1% over last year, or 7.4% on a currency-neutral basis, all organic, to reach $109.5 million
  • Total branded revenue recorded solid organic growth of 12.2%
  • EBITDA of $21.3 million or 19.5% of revenue, reflecting investments in marketing
  • Adjusted diluted EPS of $0.38 for the quarter
  • Cash flows before working capital, interest and after restructuring costs remain strong at $17.8 million

"We posted solid organic growth on a global basis with a particularly strong performance from our branded products at 12.2%, reflecting solid momentum in the HCP and Retail channels in North America. While our European operations faced some headwinds from the weak general economy, we are pleased by the 3.7% growth rate (currency neutral) recorded for the quarter. Overall, revenues surpassed our expectations given the expected decrease in our Retail Private Label business," said Pierre Fitzgibbon, President and CEO.

"Lower EBITDA margin for the quarter reflects a growth rate at Garden of Life well above the industry. In addition, significant investments in mailers were made at Nutri-Health which caused a negative EBITDA. As a result, we are currently reviewing the traditional mailing business model.

"Aligned with our right-sizing initiatives, we have decided to close our manufacturing operations in Penticton, British Columbia by the end of September 2012. Production is in the process of being transferred to our other manufacturing facilities.

"As indicated over the past year, we face heightened pressure from a regulatory perspective. Associated expenses to elevate our cGMP standards have and will continue to impact margins. However, we are seeing evidence that the industry dynamic is changing which will allow overtime recovering part of these regulatory expenses," concluded Mr. Fitzgibbon.

For the quarter ended June 30, 2012, Atrium recorded revenues of $109.5 million representing an increase of 4.1% (7.4% on a currency-neutral basis) compared to revenues of $105.2 million in 2011. The increase, all organic, is mainly attributable to the solid performance of our branded products with organic growth of 12.2% including solid momentum of HCP and HFS brands partially offset by revenue decreases from the Private Label businesses, and also the unfavourable impact of exchange rates.

EBITDA for the quarter was $21.3 million or 19.5% of revenues compared to $23.8 million or 22.6% of revenues for the same period in 2011. The EBITDA margin decreased by 3.1% year over year and is largely explained by a decline in the gross margin related to product mix, additional investments in marketing in the retail branded segment and the euro/US dollar exchange rate with an unfavourable impact of $0.9 million.

Net earnings attributable to shareholders were $12.2 million for the second quarter in 2012 compared to $14.4 million in 2011, while net earnings per share ("EPS") on a diluted basis were $0.36 per share, as compared to $0.44 per share for the same period in 2011. The adjusted diluted EPS were $0.38 in 2012 compared to diluted EPS of $0.44 in 2011.

Cash flows from operating activities before changes in non-cash working capital items, interest expenses and restructuring costs were $17.8 million, compared to $18.9 million in 2011. As at June 30, 2012, the Company had a total debt of $281.4 million and a cash position of $11.6 million.

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

Conference Call and Webcast

Atrium will hold its quarterly conference call and webcast to discuss its 2012 second quarter results on August 10, 2012 at 8:30 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 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.

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