Atrium Innovations reports growth in Q1

Atrium Innovations reports growth in Q1

Company attributes organic growth to solid performance of health care practitioner and health food stores channels in North America and improved sales in Germany.

Atrium Innovations Inc., 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 percent over last year, or 3.2 percent on a currency-neutral basis, all organic, to reach $110.0 million
  • Total branded revenue organic growth of 5.1 percent
  • EBITDA of $22.8 million or 20.8 percent 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 percent 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 percent following refocused sales and marketing efforts. The first quarter EBITDA margin of 20.8 percent 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 percent (3.2 percent 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 percent and 15 percent, respectively, and improved sales in Germany, with a growth of 5 percent, 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 percent of revenues compared to $23.4 million or 21.7 percent of revenues for the same period in 2011. The EBITDA margin decreased by 0.9 percent 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 percent 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 percent reduction in comparison to when the NCIB program was first launched in November of 2010.

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