Atrium Innovations Announces 2012 Third Quarter Financial Results
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.
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