TORONTO, Aug. 12, 2014 (GLOBE NEWSWIRE) -- SunOpta Inc. ("SunOpta" or the "Company") (Nasdaq:STKL) (TSX:SOY), a leading global company focused on natural, organic and specialty foods, today announced financial results for the second quarter ended July 5, 2014. All amounts are expressed in U.S. dollars and results are reported in accordance with U.S. GAAP, except where specifically noted.
Second Quarter 2014 Highlights
- Revenues of $338.3 million, an increase of 8.7% on a consolidated basis, and 12.6% within SunOpta Foods after excluding the impact of changes in commodity prices and foreign exchange rates
- Operating income¹ of $16.8 million, or 5.0% of revenues
- EBITDA¹ of $22.7 million, or 6.7% of revenues
- Earnings from continuing operations of $8.7 million, or $0.13 per diluted common share
-
Cash provided by operations of $33.2 million
(comparisons above are to the quarter ended June 29, 2013)
"We continued to see the benefits of our operational realignment and re-positioned go-to-market strategy in the second quarter, leading to record revenues and earnings for the Company," commented Steve Bromley, Chief Executive Officer of SunOpta. "During the quarter we realized strong revenue growth and improved operating income as a percentage of revenues, consistent with our stated objectives of growing our top line while at the same time improving our margin profile.
Year-to-date 2014 Highlights
- Revenues of $671.8 million, an increase of 13.1% on a consolidated basis, and 14.4% within SunOpta Foods after excluding the impact of changes in commodity prices and foreign exchange rates
- Operating income¹ of $28.8 million, or 4.3% of revenues
- EBITDA¹ of $40.6 million, or 6.0% of revenues
-
Earnings from continuing operations of $15.3 million, or $0.23 per diluted common share
(comparisons above are to the two quarters ended June 29, 2013)
Bromley continued, "We continue to believe that interest in healthy eating is a key long term global trend and we are well positioned to capitalize on future growth via our integrated natural and organic foods platform. Our management team remains focused on our three core strategies of becoming a pure-play natural and organic foods company, growing our value-added consumer products and ingredients portfolio, and leveraging our integrated platform in support of our long-term financial targets."
Second Quarter 2014 Results
Revenues increased 8.7% to a record $338.3 million compared to $311.2 million in the second quarter of 2013. Excluding the impact of changes in commodity prices and foreign exchange rates, consolidated revenues increased 10.5% and SunOpta Foods revenues increased 12.6% versus the prior year. All core foods operating segments realized increased revenues versus the prior year. The increase in revenues was led by higher demand for internationally sourced organic raw materials both domestically and abroad, and continued growth in consumer packaged categories including aseptic beverages, frozen foods, and re-sealable pouch products. This growth more than offset lower commodity grain sales and declines within Opta Minerals Inc.
Operating income¹ was $16.8 million, or 5.0% of revenues, compared to $13.3 million, or 4.3% of revenues in the second quarter of 2013. SunOpta Foods operating income, including corporate services, was $15.2 million, or 5.0% of revenues, compared to $12.4 million, or 4.5% of revenues in the prior year. The growth in operating income was driven by increased volume and margins on organic raw materials, increased volume of consumer products including aseptic beverages and healthy snacks, improved performance in sunflower operations, as well as improved margins at Opta Minerals as a result of cost reductions and product mix. These positive factors were partially offset by margin pressure experienced in value-added ingredients as a result of decreased production volumes, lower organic feed and specialty corn margins, and increased corporate costs to drive efficiency in the operating segments.
Earnings from continuing operations for the second quarter of 2014 were $8.7 million, or $0.13 per diluted common share, compared to a loss of $15.3 million, or $0.23 per common share, during the second quarter of 2013. Included in the results for the second quarter of 2013 was a non-cash impairment charge of $21.5 million after tax, or $0.32 per common share, related to a write-down of the Company's investment in Mascoma Corporation. Excluding this charge and the impact of discontinued operations, earnings from continuing operations for the second quarter of 2013 were $0.10 per diluted common share.
EBITDA¹ was $22.7 million in the second quarter of 2014, compared to $18.7 million in the prior year.
Year-to-date 2014 Results
Revenues increased 13.1% to a record $671.8 million, compared to $594.0 million in the first half of 2013. The increase in consolidated revenues was driven by strong demand for internationally sourced organic raw materials, continued growth in consumer packaged categories including aseptic beverages, frozen foods, and re-sealable pouch products, as well as new value-added ingredient business. This growth more than offset lower commodity grain sales and declines within Opta Minerals Inc. Fiscal 2014 will be a 53-week year, and the extra week fell in the first quarter, resulting in a 27-week first half versus 26 weeks in the prior year. Excluding the extra week of sales, as well as the impact of changes in commodity prices and foreign exchange rates, revenues in SunOpta Foods increased 14.4% versus the prior year and consolidated revenues increased 12.1%.
Operating income¹ for the first half of 2014 was $28.8 million, or 4.3% of revenues, compared to $24.0 million, or 4.0% of revenues, in the first half of 2013. Operating earnings were driven by increased volume and margins on organic raw materials, improved performance in the sunflower category, and increased volume of consumer products including aseptic beverages, frozen foods and healthy snacks, offset by margin pressure experienced in Opta Minerals due to cyclical market weakness, lower organic feed margins, and increased corporate costs to drive efficiency in the operating segments.
Earnings for the first half of 2014 were $15.3 million, or $0.23 per diluted common share, compared to a loss of $10.2 million, or $0.15 per common share, during the first half of 2013 due mainly to the $21.5 million non-cash impairment of the Company's investment in Mascoma Corporation recognized in the prior year. Excluding this charge and the impact of discontinued operations, first half earnings for 2013 were $0.17 per diluted common share.
EBITDA¹ was $40.6 million in the first half of 2014, compared to $34.8 million in the prior year.
Balance Sheet
The Company's balance sheet remains strong and at July 5, 2014 reflected a net debt to equity ratio of 0.49 to 1.00. Cash provided by operations was $33.2 million during the second quarter, a record for the Company, and $20.6 million for the first half of 2014, reflecting improved earnings and working capital efficiency. At July 5, 2014, the Company had total debt outstanding of $174.0 million, net debt of $167.3 million, total assets of $703.0 million, shareholders' equity of $344.1 million and a net book value of $5.14 per outstanding share.
Conference Call
The Company plans to host a conference call at 9:00 A.M. Eastern Time on Wednesday, August 13, 2014 to discuss the results for the second quarter of 2014 and recent corporate developments. After opening remarks, there will be a question and answer period. This conference call can be accessed via a link at the Company's website at www.sunopta.com. To listen to the live call over the Internet, please go to the Company's website at least 15 minutes early to register, download and install any necessary audio software. Additionally, the call may be accessed with the toll free dial-in number (877) 312-9198 or international dial-in number (631) 291-4622. If you are unable to listen live, the conference call will be archived and can be accessed for approximately 90 days at the Company's website.
1See discussion of non-GAAP measures
About SunOpta Inc.
SunOpta Inc. is a leading global company focused on natural, organic and specialty foods products. The Company specializes in sourcing, processing and packaging of natural and organic food products, integrated from seed through packaged products; with a focus on strategically vertically integrated business models. The Company's core natural and organic food operations focus on value-added grains, fiber and fruit based product offerings, supported by a global infrastructure. The Company has two non-core holdings, a 66.0% ownership position in Opta Minerals Inc., listed on the Toronto Stock Exchange, a producer, distributor, and recycler of environmentally friendly industrial materials; and a minority ownership position in Mascoma Corporation, an innovative biofuels company.
The SunOpta Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3958
Forward-Looking Statements
Certain statements included in this press release may be considered "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation, which are based on information available to us on the date of this release. These forward-looking statements include, but are not limited to, the expected benefits of our operational realignment, our positioning to capitalize on future industry growth trends and our continued focus on our three core strategies. The terms and phrases "continue", "well-positioned", "believe", "remains", leveraging" and other similar terms and phrases are intended to identify these forward looking statements. Forward looking statements are based on information available to us on the date of this release and are based on estimates and assumptions made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments as well as other factors the Company believes are appropriate in the circumstances including, but not limited to, general economic conditions, consumer interest in health and wellness, product pricing levels, current customer demand, planned facility and operational expansions, competitive intensity, cost rationalization and product development initiatives. Whether actual timing and results will agree with expectations and predications of the Company is subject to many risks and uncertainties including, but not limited to, global economic conditions, consumer spending patterns and changes in market trends, decreases in customer demand, delayed or unsuccessful product development efforts, potential product recalls, working capital management and continuous improvement initiatives, availability and pricing of raw materials and supplies, potential covenant breaches under our credit facilities and other risks described from time to time under "Risk Factors" in the Company's Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q (available at www.sec.gov). Consequently all forward-looking statements made herein are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by the Company will be realized.
| SunOpta Inc. | ||||
| Consolidated Statements of Operations | ||||
| For the quarter and two quarters ended July 5, 2014 and June 29, 2013 | ||||
| (Unaudited) | ||||
| (Expressed in thousands of U.S. dollars, except per share amounts) | ||||
| Quarter ended | Two quarters ended | |||
| July 5, 2014 | June 29, 2013 | July 5, 2014 | June 29, 2013 | |
| $ | $ | $ | $ | |
| Revenues | 338,288 | 311,170 | 671,815 | 593,995 |
| Cost of goods sold | 294,219 | 274,187 | 590,319 | 522,762 |
| Gross profit | 44,069 | 36,983 | 81,496 | 71,233 |
| Selling, general and administrative expenses | 25,680 | 22,839 | 50,218 | 45,750 |
| Intangible asset amortization | 1,092 | 1,200 | 2,220 | 2,448 |
| Other expense (income), net | 137 | 647 | (1,004) | 1,012 |
| Foreign exchange loss (gain) | 546 | (356) | 223 | (941) |
| Earnings from continuing operations before the following | 16,614 | 12,653 | 29,839 | 22,964 |
| Interest expense, net | 2,010 | 2,238 | 4,158 | 3,928 |
| Impairment loss on investment | -- | 21,495 | -- | 21,495 |
| Earnings (loss) from continuing operations before income taxes | 14,604 | (11,080) | 25,681 | (2,459) |
| Provision for income taxes | 5,607 | 3,958 | 10,064 | 7,233 |
| Earnings (loss) from continuing operations | 8,997 | (15,038) | 15,617 | (9,692) |
| Loss from discontinued operations, net of income taxes | -- | (302) | -- | (360) |
| Earnings (loss) | 8,997 | (15,340) | 15,617 | (10,052) |
| Earnings (loss) attributable to non-controlling interests | 289 | (59) | 269 | 104 |
| Earnings (loss) attributable to SunOpta Inc. | 8,708 | (15,281) | 15,348 | (10,156) |
| Earnings (loss) per share – basic | ||||
| - from continuing operations | 0.13 | (0.23) | 0.23 | (0.15) |
| - from discontinued operations | -- | -- | -- | (0.01) |
| 0.13 | (0.23) | 0.23 | (0.15) | |
| Earnings (loss) per share – diluted | ||||
| - from continuing operations | 0.13 | (0.23) | 0.23 | (0.15) |
| - from discontinued operations | -- | -- | -- | (0.01) |
| 0.13 | (0.23) | 0.23 | (0.15) | |
| Weighted-average number of shares outstanding (000s) | ||||
| - basic | 66,715 | 66,202 | 66,667 | 66,147 |
| - diluted | 68,458 | 67,514 | 68,058 | 67,346 |
| SunOpta Inc. | ||
| Consolidated Balance Sheets | ||
| As at July 5, 2014 and December 28, 2013 | ||
| (Unaudited) | ||
| (Expressed in thousands of U.S. dollars) | ||
| July 5, 2014 | December 28, 2013 | |
| $ | $ | |
| ASSETS | ||
| Current assets | ||
| Cash and cash equivalents | 6,727 | 8,537 |
| Accounts receivable | 133,022 | 109,917 |
| Inventories | 255,883 | 274,286 |
| Prepaid expenses and other current assets | 20,266 | 16,067 |
| Current income taxes recoverable | 3,541 | 6,116 |
| Deferred income taxes | 3,950 | 4,806 |
| 423,389 | 419,729 | |
| Investment | 12,350 | 12,350 |
| Property, plant and equipment | 154,797 | 158,073 |
| Goodwill | 53,600 | 53,673 |
| Intangible assets | 45,178 | 47,991 |
| Deferred income taxes | 12,117 | 12,565 |
| Other assets | 1,563 | 1,554 |
| 702,994 | 705,935 | |
| LIABILITIES | ||
| Current liabilities | ||
| Bank indebtedness | 127,967 | 141,853 |
| Accounts payable and accrued liabilities | 125,196 | 129,829 |
| Customer and other deposits | 3,894 | 3,408 |
| Income taxes payable | 1,162 | 2,564 |
| Other current liabilities | 4,000 | 2,114 |
| Current portion of long-term debt | 6,190 | 6,354 |
| Current portion of long-term liabilities | 249 | 1,034 |
| 268,658 | 287,156 | |
| Long-term debt | 39,843 | 42,654 |
| Long-term liabilities | 1,703 | 3,072 |
| Deferred income taxes | 31,015 | 30,441 |
| 341,219 | 363,323 | |
| EQUITY | ||
| SunOpta Inc. shareholders' equity | ||
| Common shares | 189,280 | 186,376 |
| Additional paid-in capital | 20,471 | 19,323 |
| Retained earnings | 131,556 | 116,208 |
| Accumulated other comprehensive income | 2,812 | 3,397 |
| 344,119 | 325,304 | |
| Non-controlling interests | 17,656 | 17,308 |
| Total equity | 361,775 | 342,612 |
| 702,994 | 705,935 | |
| SunOpta Inc. | ||||
| Consolidated Statements of Cash Flows | ||||
| For the quarter and two quarters ended July 5, 2014 and June 29, 2013 | ||||
| (Unaudited) | ||||
| (Expressed in thousands of U.S. dollars) | ||||
| Quarter ended | Two quarters ended | |||
| July 5, 2014 | June 29, 2013 | July 5, 2014 | June 29, 2013 | |
| $ | $ | $ | $ | |
| CASH PROVIDED BY (USED IN) | ||||
| Operating activities | ||||
| Earnings (loss) | 8,997 | (15,340) | 15,617 | (10,052) |
| Loss from discontinued operations | -- | (302) | -- | (360) |
| Earnings (loss) from continuing operations | 8,997 | (15,038) | 15,617 | (9,692) |
| Items not affecting cash: | ||||
| Depreciation and amortization | 5,950 | 5,429 | 11,786 | 10,849 |
| Stock-based compensation | 974 | 856 | 1,805 | 1,541 |
| Unrealized loss (gain) on derivative instruments | (406) | 199 | 219 | 942 |
| Deferred income taxes | 1,474 | 564 | 1,878 | 1,505 |
| Fair value of contingent consideration | -- | -- | (1,373) | -- |
| Impairment loss on investment | -- | 21,495 | 21,495 | |
| Other | (535) | (219) | (184) | 103 |
| Changes in non-cash working capital, net of businesses acquired | 16,728 | 15,191 | (9,162) | (4,985) |
| Net cash flows from operations - continuing operations | 33,182 | 28,477 | 20,586 | 21,758 |
| Net cash flows from operations - discontinued operations | -- | (4,570) | -- | (4,608) |
| 33,182 | 23,907 | 20,586 | 17,150 | |
| Investing activities | ||||
| Purchases of property, plant and equipment | (4,063) | (14,083) | (7,287) | (21,976) |
| Acquisitions of businesses, net of cash acquired | -- | -- | -- | (3,828) |
| Payment of contingent consideration | -- | (1,074) | (800) | (1,074) |
| Other | (35) | (341) | 44 | (838) |
| Net cash flows from investing activities - continuing operations | (4,098) | (15,498) | (8,043) | (27,716) |
| Financing activities | ||||
| Increase (decrease) under line of credit facilities | (29,094) | (7,857) | (13,565) | 12,782 |
| Borrowings under long-term debt | 150 | 112 | 210 | 344 |
| Repayment of long-term debt | (1,585) | (1,601) | (3,156) | (4,020) |
| Proceeds from the issuance of common shares | 1,582 | 567 | 2,247 | 1,231 |
| Other | 19 | 11 | (79) | (48) |
| Net cash flows from financing activities - continuing operations | (28,928) | (8,768) | (14,343) | 10,289 |
| Foreign exchange gain (loss) on cash held in a foreign currency | (66) | 110 | (10) | (103) |
| Increase (decrease) in cash and cash equivalents in the period | 90 | (249) | (1,810) | (380) |
| Cash and cash equivalents - beginning of the period | 6,637 | 6,709 | 8,537 | 6,840 |
| Cash and cash equivalents - end of the period | 6,727 | 6,460 | 6,727 | 6,460 |
| SunOpta Inc. | ||||
| Segmented Information | ||||
| For the quarter and two quarters ended July 5, 2014 and June 29, 2013 | ||||
| Unaudited | ||||
| (Expressed in thousands of U.S. dollars) | ||||
| Quarter ended | Two quarters ended | |||
| July 5, 2014 | June 29, 2013 | July 5, 2014 | June 29, 2013 | |
| $ | $ | $ | $ | |
| Segment revenues from external customers: | ||||
| Global Sourcing and Supply | 157,466 | 144,900 | 300,824 | 269,809 |
| Value Added Ingredients | 33,562 | 33,043 | 71,310 | 64,548 |
| Consumer Products | 112,017 | 95,765 | 229,893 | 185,951 |
| SunOpta Foods | 303,045 | 273,708 | 602,027 | 520,308 |
| Opta Minerals | 35,243 | 37,462 | 69,788 | 73,687 |
| Total segment revenues from external customers | 338,288 | 311,170 | 671,815 | 593,995 |
| Segment operating income (loss): | ||||
| Global Sourcing and Supply | 8,360 | 4,052 | 11,418 | 5,725 |
| Value Added Ingredients | 1,290 | 1,953 | 3,637 | 3,953 |
| Consumer Products | 8,164 | 8,279 | 16,100 | 14,230 |
| SunOpta Foods | 17,814 | 14,284 | 31,155 | 23,908 |
| Opta Minerals | 1,571 | 903 | 2,596 | 3,366 |
| Corporate Services | (2,634) | (1,887) | (4,916) | (3,298) |
| Total segment operating income | 16,751 | 13,300 | 28,835 | 23,976 |
| Segment operating income percentage: | ||||
| Global Sourcing and Supply | 5.3% | 2.8% | 3.8% | 2.1% |
| Value Added Ingredients | 3.8% | 5.9% | 5.1% | 6.1% |
| Consumer Products | 7.3% | 8.6% | 7.0% | 7.7% |
| SunOpta Foods | 5.9% | 5.2% | 5.2% | 4.6% |
| Opta Minerals | 4.5% | 2.4% | 3.7% | 4.6% |
| Total segment operating income | 5.0% | 4.3% | 4.3% | 4.0% |
| (Segment operating income (loss) is defined as "Earnings from continuing operations before the following" excluding the impact of "Other expense (income), net".) | ||||
1Non-GAAP Measures
In addition to reporting financial results in accordance with U.S. GAAP, the Company provides information regarding segment operating income and earnings before interest, taxes, depreciation and amortization ("EBITDA") as additional information about its operating results, which are not measures in accordance with U.S. GAAP. The Company believes that these non-GAAP measures assist investors in comparing performance across reporting periods on a consistent basis by excluding items that are not indicative of the Company's core operating performance. The non-GAAP measures of segment operating income and EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with U.S. GAAP.
The Company defines segment operating income as "earnings from continuing operations before the following" excluding the impact of other income/expense items; and EBITDA as segment operating income plus depreciation and amortization. The following is a tabular presentation of segment operating income and EBITDA, including a reconciliation to earnings from continuing operations, which the Company believes to be the most directly comparable U.S. GAAP financial measure:
| Quarter ended | Two quarters ended | |||
| July 5, 2014 | June 29, 2013 | July 5, 2014 | June 29, 2013 | |
| $ | $ | $ | $ | |
| Earnings (loss) from continuing operations | 8,997 | (15,038) | 15,617 | (9,692) |
| Provision for income taxes | 5,607 | 3,958 | 10,064 | 7,233 |
| Interest expense, net | 2,010 | 2,238 | 4,158 | 3,928 |
| Other expense (income), net | 137 | 647 | (1,004) | 1,012 |
| Impairment loss on investment | -- | 21,495 | -- | 21,495 |
| Total segment operating income | 16,751 | 13,300 | 28,835 | 23,976 |
| Depreciation and amortization | 5,950 | 5,429 | 11,786 | 10,849 |
| EBITDA | 22,701 | 18,729 | 40,621 | 34,825 |