TORONTO, May 12, 2015 (GLOBE NEWSWIRE) -- SunOpta Inc. (Nasdaq:STKL) (TSX:SOY), a leading global company focused on natural, organic and specialty foods, today announced financial results for the 13-week first quarter ended April 4, 2015. All amounts are expressed in U.S. dollars and results are reported in accordance with U.S. GAAP, except where specifically noted.
First Quarter 2015 Highlights
- Revenues increased 9.1% within SunOpta Foods and 6.9% on a consolidated basis after adjusting for an additional week of sales in the first quarter of 2014, as well as changes including commodity prices, foreign exchange rates, and product rationalizations.
- Reported revenues of $303.4 million versus $322.4 million in the prior year, a 5.9% decrease on a consolidated basis and 4.8% decrease within SunOpta Foods.
- Operating income¹ of $9.4 million, or 3.1% of revenues versus $12.0 million or 3.7% in the prior year which included an extra week in the quarter.
- EBITDA¹ of $14.8 million, or 4.9% of revenues versus $17.4 million or 5.4% of revenues in the prior year which included an extra week in the quarter.
- Earnings of $5.2 million, or $0.08 per diluted common share, which includes earnings in the core foods business of $0.09 per diluted common share, partially offset by a loss of $0.01 per diluted common share attributable to non-core operations, versus earnings of $6.6 million, or $0.10 per diluted common share in the prior year, which includes the impact from the extra week of business.
(All comparisons above are to the 14-week quarter ended April 5, 2014)
"We started the year by continuing to further execute on our core strategies across our portfolio to better position us for long-term growth and margin enhancement. Our solid results in Global Ingredients were offset by weakness in Consumer Products, although we did see improved performance within Consumer Products on a sequential quarter basis. We expect our business to continue to evolve, and we believe our natural and organic foods business is well-positioned to serve the growing and sustainable consumer shift towards healthy and better-for-you food products," said Steve Bromley, Chief Executive Officer, of SunOpta Inc. "The improvement of operating margins within Consumer Products remains a primary focus for us and we are working on a number of fronts, including facility and capabilities expansion, cost reduction initiatives, and growth through innovation to help generate results. Going forward, we believe we are well-positioned in growing markets and we have the financial flexibility to continue to capture growth and leverage our integrated platform."
First Quarter 2015 Results
Revenues for the 13-week first quarter decreased 5.9% to $303.4 million compared to $322.4 million for the 14-week first quarter of 2014. The extra week contributed approximately $21.3 million of the revenue in the first quarter of 2014. After adjusting for the impact of changes including commodity prices, foreign exchange rates, product rationalizations and an additional week of sales in the first quarter of 2014, consolidated revenues increased 6.9% and SunOpta Foods revenues increased 9.1% versus the prior year first quarter. The increase in revenues was primarily due to stronger demand for organic ingredients in the U.S. and Europe, partially offset by lower sales in snack-based food categories and competitive pressures on certain steel and industrial mineral products in Opta Minerals.
Operating income¹ was $9.4 million, or 3.1% of revenues, compared to $12.0 million, or 3.7% of revenues in the first quarter of 2014. SunOpta Foods operating income, including corporate services, was $10.0 million, or 3.6% of revenues, compared to $11.0 million, or 3.8% of revenues in the prior year first quarter. The decline in operating income is attributable to lower volumes of snack products, higher raw material costs in frozen fruit, costs associated with the retrofit of the Company's premium juice operation, and costs related to expansion activities at the Allentown, Pennsylvania facility to add aseptic beverage processing and filling capabilities. These pressures were partially offset by increased volumes of organic ingredients and improved performance within the Company's rationalized sunflower operations. In addition, lower volumes of higher-margin steel products at Opta Minerals resulted in an operating loss of $0.5 million in the first quarter of 2015, a decrease in operating income of $1.5 million as compared to the prior year.
Earnings for the 13-week first quarter of 2015 were $5.2 million, or $0.08 per diluted common share, compared to $6.6 million, or $0.10 per diluted common share, during the 14-week first quarter of 2014. Earnings for the first quarter of 2015 includes approximately $1.2 million, or approximately $0.01 per diluted common share, of incremental costs related to the retrofit of the San Bernardino premium juice facility, which is now operational, expansion activities at the Allentown aseptic facility scheduled to come on-line in the fourth quarter of 2015, and the effect of west coast port delays on export shipments to Asia.
EBITDA¹ was $14.8 million in the first quarter of 2015, compared to $17.4 million in the prior year.
Balance Sheet
The Company's balance sheet remains strong and at April 4, 2015 reflected a net debt to equity ratio of 0.41 to 1.00. At April 4, 2015, the Company had total debt outstanding of $144.7 million, net debt of $141.3 million, total assets of $671.4 million, shareholders' equity of $345.2 million and a net book value of $5.10 per outstanding share.
Conference Call
The Company plans to host a conference call at 10:00 A.M. Eastern Time on Wednesday, May 13, 2015 to discuss the first quarter financial results 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 1 (877) 312-9198 or International dial-in number 1 (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 and Adjusted Earnings from Continuing Operations
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, fruit and vegetable based product offerings, supported by a global infrastructure. The Company also has an approximately 66% ownership position in Opta Minerals Inc., listed on the Toronto Stock Exchange, a producer, distributor, and recycler of environmentally friendly industrial materials.
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, our positioning for growth and margin enhancement, our expectations with respect to consumer trends, our ability to capture growth and leverage our platforms and anticipated timing of completion of expansion activities at our Allentown aseptic facility. Generally, forward-looking statements do not relate strictly to historical or current facts and are typically accompanied by words such as "expect", "believe", "anticipate", "estimate", "intend", "project", "potential", "continue", "could", "would", "should", "might", "plan", "will", "may", "predict" or other similar terms and phrases 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, continued consumer interest in health and wellness, ability to maintain product pricing levels, current customer demand, planned facility and operational expansions, competitive intensity, cost rationalization, product development initiatives, and alternative potential uses for our capital resources. 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 quarters ended April 4, 2015 and April 5, 2014 | ||||
| (Unaudited) | ||||
| (Expressed in thousands of U.S. dollars, except per share amounts) | ||||
| Quarter ended | ||||
| April 4, 2015 | April 5, 2014 | |||
| $ | $ | |||
| Revenues | 303,406 | 322,379 | ||
| Cost of goods sold | 270,514 | 286,157 | ||
| Gross profit | 32,892 | 36,222 | ||
| Selling, general and administrative expenses | 23,670 | 23,399 | ||
| Intangible asset amortization | 1,130 | 1,123 | ||
| Other expense (income), net | 34 | (1,141) | ||
| Foreign exchange gain | (1,340) | (323) | ||
| Earnings from continuing operations before the following | 9,398 | 13,164 | ||
| Interest expense, net | 1,823 | 2,148 | ||
| Earnings from continuing operations before income taxes | 7,575 | 11,016 | ||
| Provision for income taxes | 2,757 | 4,433 | ||
| Earnings from continuing operations | 4,818 | 6,583 | ||
| Earnings from discontinued operations, net of income taxes | -- | 37 | ||
| Earnings | 4,818 | 6,620 | ||
| Loss attributable to non-controlling interests | (416) | (20) | ||
| Earnings attributable to SunOpta Inc. | 5,234 | 6,640 | ||
| Earnings per share – basic | ||||
| - from continuing operations | 0.08 | 0.10 | ||
| - from discontinued operations | -- | -- | ||
| 0.08 | 0.10 | |||
| Earnings per share – diluted | ||||
| - from continuing operations | 0.08 | 0.10 | ||
| - from discontinued operations | -- | -- | ||
| 0.08 | 0.10 | |||
| Weighted-average number of shares outstanding (000s) | ||||
| - basic | 67,400 | 66,573 | ||
| - diluted | 68,268 | 68,585 | ||
| SunOpta Inc. | ||||
| Consolidated Balance Sheets | ||||
| As at April 4, 2015 and January 3, 2015 | ||||
| (Unaudited) | ||||
| (Expressed in thousands of U.S. dollars) | ||||
| April 4, 2015 | January 3, 2015 | |||
| $ | $ | |||
| ASSETS | ||||
| Current assets | ||||
| Cash and cash equivalents | 3,491 | 9,938 | ||
| Accounts receivable | 128,277 | 125,896 | ||
| Inventories | 269,300 | 264,256 | ||
| Prepaid expenses and other current assets | 21,615 | 18,935 | ||
| Current income taxes recoverable | 2,497 | 2,233 | ||
| Deferred income taxes | 5,519 | 8,107 | ||
| 430,699 | 429,365 | |||
| Property, plant and equipment | 134,834 | 134,920 | ||
| Goodwill | 45,500 | 29,082 | ||
| Intangible assets | 51,698 | 40,640 | ||
| Deferred income taxes | 3,699 | 2,061 | ||
| Other assets | 4,942 | 4,882 | ||
| 671,372 | 640,950 | |||
| LIABILITIES | ||||
| Current liabilities | ||||
| Bank indebtedness | 109,217 | 91,410 | ||
| Accounts payable and accrued liabilities | 121,072 | 128,437 | ||
| Customer and other deposits | 8,313 | 4,127 | ||
| Income taxes payable | 1,603 | 3,090 | ||
| Other current liabilities | 2,163 | 3,087 | ||
| Current portion of long-term debt | 5,445 | 5,927 | ||
| Current portion of long-term liabilities | 4,816 | 250 | ||
| 252,629 | 236,328 | |||
| Long-term debt | 30,083 | 33,928 | ||
| Long-term liabilities | 17,664 | 1,962 | ||
| Deferred income taxes | 13,973 | 15,404 | ||
| 314,349 | 287,622 | |||
| EQUITY | ||||
| SunOpta Inc. shareholders' equity | ||||
| Common shares | 194,316 | 190,668 | ||
| Additional paid-in capital | 22,352 | 22,490 | ||
| Retained earnings | 134,543 | 129,309 | ||
| Accumulated other comprehensive loss | (6,045) | (1,778) | ||
| 345,166 | 340,689 | |||
| Non-controlling interests | 11,857 | 12,639 | ||
| Total equity | 357,023 | 353,328 | ||
| 671,372 | 640,950 | |||
| SunOpta Inc. | ||||
| Consolidated Statements of Cash Flows | ||||
| For the quarters ended April 4, 2015 and April 5, 2014 | ||||
| (Unaudited) | ||||
| (Expressed in thousands of U.S. dollars) | ||||
| Quarter ended | ||||
| April 4, 2015 | April 5, 2014 | |||
| $ | $ | |||
| CASH PROVIDED BY (USED IN) | ||||
| Operating activities | ||||
| Earnings | 4,818 | 6,620 | ||
| Earnings from discontinued operations | -- | 37 | ||
| Earnings from continuing operations | 4,818 | 6,583 | ||
| Items not affecting cash: | ||||
| Depreciation and amortization | 5,384 | 5,377 | ||
| Deferred income taxes | (481) | 404 | ||
| Stock-based compensation | 1,082 | 831 | ||
| Unrealized loss on derivative instruments | (103) | 625 | ||
| Fair value of contingent consideration | -- | (1,373) | ||
| Other | 477 | 351 | ||
| Changes in non-cash working capital, net of business acquired | (22,663) | (24,928) | ||
| Net cash flows from operations - continuing operations | (11,486) | (12,130) | ||
| Net cash flows from operations - discontinued operations | -- | (466) | ||
| (11,486) | (12,596) | |||
| Investing activities | ||||
| Acquisition of business, net of cash acquired | (13,300) | -- | ||
| Purchases of property, plant and equipment | (5,651) | (3,574) | ||
| Payment of contingent consideration | -- | (800) | ||
| Other | (122) | (37) | ||
| Net cash flows from investing activities - continuing operations | (19,073) | (4,411) | ||
| Net cash flows from investing activities - discontinued operations | -- | 466 | ||
| (19,073) | (3,945) | |||
| Financing activities | ||||
| Increase under line of credit facilities | 23,257 | 15,529 | ||
| Borrowings of long-term debt | -- | 60 | ||
| Repayment of long-term debt | (1,415) | (1,571) | ||
| Proceeds from the issuance of common shares | 1,616 | 665 | ||
| Proceeds from the exercise of warrants | 812 | -- | ||
| Other | (137) | (98) | ||
| Net cash flows from financing activities - continuing operations | 24,133 | 14,585 | ||
| Foreign exchange gain (loss) on cash held in a foreign currency | (21) | 56 | ||
| Increase in cash and cash equivalents in the period | (6,447) | (1,900) | ||
| Cash and cash equivalents - beginning of the period | 9,938 | 8,537 | ||
| Cash and cash equivalents - end of the period | 3,491 | 6,637 | ||
| SunOpta Inc. | ||||
| Segmented Information | ||||
| For the quarters ended April 4, 2015 and April 5, 2014 | ||||
| Unaudited | ||||
| (Expressed in thousands of U.S. dollars) | ||||
| Quarter ended | ||||
| April 4, 2015 | April 5, 2014 | |||
| $ | $ | |||
| Segment revenues from external customers: | ||||
| Global Ingredients | 155,057 | 153,313 | ||
| Consumer Products | 118,892 | 134,521 | ||
| SunOpta Foods | 273,949 | 287,834 | ||
| Opta Minerals | 29,457 | 34,545 | ||
| Total segment revenues from external customers | 303,406 | 322,379 | ||
| Segment gross profit | ||||
| Global Ingredients | 17,319 | 13,320 | ||
| Consumer Products | 11,851 | 18,003 | ||
| SunOpta Foods | 29,170 | 31,323 | ||
| Opta Minerals | 3,722 | 4,899 | ||
| Total segment gross profit | 32,892 | 36,222 | ||
| Segment operating income (loss): | ||||
| Global Ingredients | 8,981 | 3,539 | ||
| Consumer Products | 2,560 | 10,090 | ||
| SunOpta Foods | 11,541 | 13,629 | ||
| Opta Minerals | (519) | 1,025 | ||
| Corporate Services | (1,590) | (2,631) | ||
| Total segment operating income | 9,432 | 12,023 | ||
| Segment operating income percentage: | ||||
| Global Ingredients | 5.8% | 2.3% | ||
| Consumer Products | 2.2% | 7.5% | ||
| SunOpta Foods | 4.2% | 4.7% | ||
| Opta Minerals | -1.8% | 3.0% | ||
| Total segment operating income | 3.1% | 3.7% | ||
(Segment operating income (loss) is defined as "Earnings (loss) 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 goodwill impairments; 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 | ||||
| April 4, 2015 | April 5, 2014 | |||
| $ | $ | |||
| Earnings from continuing operations | 4,818 | 6,583 | ||
| Provision for income taxes | 2,757 | 4,433 | ||
| Interest expense, net | 1,823 | 2,148 | ||
| Other expense (income), net | 34 | (1,141) | ||
| Total segment operating income | 9,432 | 12,023 | ||
| Depreciation and amortization | 5,384 | 5,377 | ||
| EBITDA | 14,816 | 17,400 | ||