Atrium Innovations reorganizes management team, posts 11.6% 2010 revenue growth

Atrium Innovations reorganizes management team, posts 11.6% 2010 revenue growth

Atrium Innovations Inc. released 2010 fourth quarter results with revenue growth of 11.6% increase and full-year financial results for the period ended December 31, 2010. Carmen Fortino is appointed as President of Atrium North American operations reporting directly to Pierre Fitzgibbon.

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, released its 2010 fourth quarter and full-year financial results for the period ended December 31, 2010.

2010 Highlights:
(All amounts are in US dollars.)

  • Revenue growth of 11.6% over previous year to reach $356.6 million
  • North American branded business posted 9.5% growth in 2010
  • Sales in Germany troughed in Q2 and improved sequentially in Q3 and Q4
  • EBITDA of $83.9 million or 23.5% of revenues and diluted EPS of $1.55 for the year
  • Completion of three strategic acquisitions: Trophic, Minami, and Seroyal representing an investment of over $130 million

"We are pleased by our performance in 2010 as our North American business did very well, particularly our branded business which expanded by 9.5%, above forecasted industry growth and in line with our expectations. On the other hand, our European business was more of a challenge with basically flat industry growth rates in Germany and Holland. While we experienced product transition issues in Germany during the year which caused significant sales decline, we quickly made adjustments to our strategy and consequently revenues progressively improved over the past two quarters, providing us with the confidence that we are rebuilding our base in Germany," said Pierre Fitzgibbon, President and CEO.

"Fourth quarter revenues and EBITDA were in line with our expectations and guidance. Factors that negatively impacted year-over-year comparisons included unfavorable exchange rates, lower sales in Germany, the introduction and ramp-up of new products at a large client of Garden of Life in 2009, and soft sales in the volatile direct to consumer segment. The latter two factors impacted the North American branded business, which in aggregate grew by 2.0% over last year.

"The acquisitions of Minami and Seroyal announced in December 2010, sound industry fundamentals and cross-selling opportunities should fuel healthy growth rates for Atrium in 2011 and beyond.

"We remain focused on optimizing operational synergies while we maintain an ambitious growth plan. The Company has reached a size that creates and attracts more opportunities, an important element as the evolution of our industry favors economies of scale. Atrium has grown on an entrepreneurial basis over the years. Now, as part of normal business evolution, we need to address and take advantage of synergistic and shared functions, which resulted in our new organizational and management structure. We aim to optimize our core synergies in terms of products, markets and operations over the next 24 months, a period during which we expect significant and favorable changes in the industry," concluded Mr. Fitzgibbon.

For the fiscal year ended December 31, 2010, Atrium recorded revenues of $356.6 million representing an increase of 11.6% compared to revenues of $319.7 million in 2009. This increase is mainly attributable to the acquisitions of Trophic and Garden of Life as well as to organic growth of North American branded business, partly offset by a decrease in sales in Germany as well as adverse exchange rates. Excluding the impact on European operations of unfavorable exchange rates between the euro and the US dollar, revenue would have been higher by $5.8 million or 13.4% when compared to 2009.

EBITDA increased by 3.9% to $83.9 million or 23.5% of revenues compared to $80.8 million or 25.3% of revenues for the same period in 2009. Without the negative impact of the euro/US dollar exchange rate, EBITDA would have increased by 5.7% to $85.3 million

Net earnings were $51.6 million in 2010 compared to $48.7 million in 2009, representing an increase of 6.0%. Net earnings per share ("EPS") on a diluted basis rose to $1.55 per share, as compared to $1.47 per share for the same period in 2009.

Cash flows from operating activities before changes in non-cash working capital items were $59.3 million, an increase of 10.1% compared to $53.9 million in 2009. As at December 31, 2010, the Company had a total debt of $275.8 million and a cash position of $12 million. The Company has a revolving credit facility that provides $300 million of borrowing capacity, of which approximately $40 million is available.

Financial Results for the Fourth Quarter of 2010

For the fourth quarter ended December 31, 2010, Atrium recorded revenues of $92.5 million representing a decrease of 2.6% compared to $95.0 million for the corresponding period in 2009. The decrease is mainly attributable to the negative impact of the euro/US dollar exchange rate when compared to the corresponding period last year representing $3.0 million, the lower sales in Germany, the launch of new products at a large client of Garden of Life last year, and softer sales in the direct to consumer market.

EBITDA for the fourth quarter of 2010 was $21.2 million or 22.9% of revenue compared to $23.0 million or 24.2% of revenues for the same period in 2009. Net earnings were $13.4 million in 2010 compared to $13.8 million in 2009, representing a decrease of 3.3%. EPS for the quarter were $0.40 per diluted share compared $0.42 per diluted share in 2009.

Cash flows from operating activities before changes in non-cash working capital items were $15.1 million in 2010 compared to $16.2 million in 2009.

New Organizational and Management Structure

Effective February 28, Carmen Fortino is appointed as President of Atrium North American operations reporting directly to Pierre Fitzgibbon. He previously held the position of Chief Executive Officer of Seroyal International Inc., acquired by Atrium in December 2010. Mr. Fortino's role will be to build on a strong brand position within the North American operations, focusing on creating and optimizing various market opportunities, while leveraging operating systems to provide best in class products and services to our clients. Mr. Fortino brings his strong entrepreneurial talents from Seroyal, and a highly successful family owned business that was sold to Canada's largest food retailer. He is a seasoned executive with extensive high-level experience leading multi-brand, multi-channel environments augmented by a solid background in supply chain, logistics and financial reporting.

Also reporting to Pierre Fitzgibbon and effective immediately, Serge Yelle will become Executive Vice-President of Strategy and Business Development. He will also serve as interim President of the European Operations. In his new role, Mr. Yelle will focus on the strategic direction, business development and Science, Innovation, and Education aspects of Atrium as a whole. Mr. Yelle's objective, similar to Mr. Fortino's role in North America, will be to address and promote various operational synergies in Europe and within the context of the Group.

Conference Call and Webcast

Atrium will hold its quarterly conference call and webcast to discuss its 2010 fourth quarter and annual results on Tuesday March 1st, 2011 at 8:30 a.m., Eastern Time. Participants may access the call by using the following numbers: 514 807-8791, 800-731-5319 or 416-644-3426. 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.

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 1,000 employees and operates seven manufacturing facilities. Additional information is available at www.atrium-innovations.com.

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