The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Press release from GlobeNewswire (a Nasdaq OMX company)

SunOpta Announces First Quarter 2010 Results

Wednesday, May 12, 2010

SunOpta Announces First Quarter 2010 Results16:30 EDT Wednesday, May 12, 2010 TORONTO, May 12, 2010 (GLOBE NEWSWIRE) -- SunOpta Inc. ("SunOpta" or "the Company") (Nasdaq:STKL) (TSX:SOY), a leading global company focused on natural, organic and specialty foods and natural health products, today announced financial results for the quarter period ended April 3, 2010. All amounts are expressed in U.S. dollars and results are reported in accordance with U.S. GAAP, except where specifically noted. For the first quarter of 2010 the Company realized revenues of $266.1 million versus first quarter 2009 revenues of $232.1 million, a year over year increase of 14.7%. Revenues in SunOpta Foods were $247.6 million, an increase of 13.9% versus the first quarter of 2009. After adjusting for movements in foreign exchange rates and commodity prices, food revenues increased approximately 10.8% in the first quarter of 2010 versus the first quarter of 2009. All operating segments realized increased revenues year over year. For the first quarter of 2010 the Company reported net income on a GAAP basis of $4.6 million or $0.07 per diluted common share versus a loss in 2009 of $(1.7) million or $(0.03) per diluted common share. Results for the quarter include additional pre-tax costs of approximately $2.4 million, including legal and professional fees and costs related to ongoing facility and operational rationalizations. Gross margin as a percentage of revenue increased to 18.4% in the quarter versus 14.5% in the prior year. All operating segments realized improved gross margins as a percentage of revenue. Operating income(1) increased to $10.7 million or 4.0% of revenues versus negative operating income(1) in the prior year of $(0.4) million or (0.02%) of revenues. Operating income(1) in SunOpta Foods increased to $12.5 million or 5.1% of revenues versus $2.7 million or 1.3% in the prior year. EBITDA(1) for the first quarter of 2010 increased 259% to $15.7 million versus $4.4 million in the first quarter of 2009, indicative of the improved operating performance realized in the business. At April 3, 2010 the Company's balance sheet reflects a current working capital ratio of 1.30 to 1.00, long-term debt to equity ratio of 0.36 to 1.00 and total debt to equity ratio of 0.72 to 1.00. During the first quarter of 2010 the Company used cash from operating activities of $14.3 million, due primarily to increased accounts receivable and normal seasonal fluctuations. At April 3, 2010 the Company has total assets of $571.1 million and a net book value of $3.68 per outstanding share. At quarter-end, the Company is in compliance with all banking covenants. Steve Bromley, President and Chief Executive Officer of SunOpta commented, "We are very pleased with our first quarter results and our return to profitability. The results of the first quarter are the product of extensive initiatives we have completed, centered on improving operating results within our core business segments while at the same time improving our return on assets employed. We continue to focus on these efforts and are very pleased that the initiatives completed to date are beginning to have the expected positive effect on our results. We remain confident that our continued focus on margin improvement, when combined with strong consumer interest in health and wellness, positions our Company for long-term success." The Company plans to host a conference call at 10:00 a.m. Eastern Time on Thursday, May 13th, 2010 to discuss these results and recent corporate developments. The conference call can be accessed via a link at the Company's website at www.sunopta.com. Additionally, the call may be accessed with the toll free dial-in number 1-877-312-9198 or 631-291-4622. A replay number can also be accessed between May 13th and 20th with the toll free dial-in number 1--800-642-1687 or 706-645-9291 followed by pass code: 71486905#. Non-GAAP Measures In addition to reporting financial results in accordance with generally accepted accounting principles ("GAAP"), the Company provides information regarding Operating Income and Earnings before interest, taxes, depreciation and amortization ("EBITDA") as additional information about its operating results. The measures are not in accordance with GAAP. The Company believes that these presentations provide useful information to management, analysts and investors regarding certain additional financial and business trends relating to its results of operations and financial condition. The Company defines Operating Income as "Earnings before the following" excluding the impact of "Other expense (income), net"; and EBITDA as Operating Income plus depreciation and amortization. The following is a tabular presentation of the non-GAAP financial measures, including a reconciliation to GAAP earnings (loss) for the period, which the Company believes to be the most directly comparable GAAP financial measure. Quarter Quarter ended ended April March 3, 2010 31, 2009 $ $ Earnings (loss) for the period 4,641 (1,979) Provision for (recovery of) income taxes 2,498 (1,066) Interest expense, net 3,121 2,871 Other expense (income), net 461 (186) ------- ------- Operating income 10,721 (360) Depreciation and amortization 4,972 4,731 ------- ------- Earnings before interest, taxes, depreciation and amortization (EBITDA) 15,693 4,371 ------- ------- About SunOpta Inc. SunOpta Inc. is an operator of high-growth ethical businesses, focusing on integrated business models in the natural and organic food and natural health markets. The Company has three business units: the SunOpta Foods, which specializes in sourcing, processing and distribution of natural and organic food products integrated from seed through packaged products; Opta Minerals Inc. (TSX:OPM) (66.4 % owned by SunOpta), a producer, distributor, and recycler of environmentally friendly industrial materials; and SunOpta BioProcess Inc. which engineers and markets proprietary steam explosion technology systems for the bio-fuel, pulp and food processing industries. SunOpta believes that each of these business units has proprietary products and services that give it a solid competitive advantage in its sector. 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, management's expectations regarding improving our operating results and return on assets employed and our continued focus on margin improvement. The terms and phrases "improving", "continue", "remain confident", "positions", 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 trends, preferences and spending patterns, product pricing levels, current customer demand, 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, potential failure of product development, working capital management and continuous improvement initiatives, availability and pricing of raw materials and supplies, 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. (1) See discussion on Non-GAAP Measures. SunOpta Inc. Consolidated Statements of Operations For the quarters ended April 3, 2010 and March 31, 2009 (Expressed in thousands of U.S. dollars, except per share amounts) (Unaudited) -------------------------------------------------------------------------- April March 3, 31, 2010 2009 % $ $ change Revenues 266,100 232,074 14.7% Cost of goods sold 217,205 198,427 9.5% ------- ------- ------------- Gross profit 48,895 33,647 45.3% Warehousing and distribution expenses 6,029 4,461 35.1% Selling, general and administrative expenses 32,171 26,852 19.8% Intangible asset amortization 1,443 1,431 0.8% Other expense (income),net 461 (186) 347.8% Foreign exchange (gain) loss (1,469) 1,263 216.3% ------- ------- ------------- Earnings (loss) before the following 10,260 (174) n/m Interest expense, net 3,121 2,871 8.7% ------- ------- ------------- Earnings (loss) before income taxes 7,139 (3,045) 334.4% Provision for (recovery of) income taxes 2,498 (1,066) 334.3% ------- ------- ------------- Earnings (loss) for the period 4,641 (1,979) 334.5% Earnings (loss) for the period attributable to non-controlling interests 28 (322) 108.7% ------- ------- ------------- Earnings (loss) for the period attributable to SunOpta Inc. 4,613 (1,657) 378.4% ======= ======= ============= Earnings (loss) per share for the period Basic 0.07 (0.03) ======= ======= Diluted 0.07 (0.03) ======= ======= SunOpta Inc. Consolidated Balance Sheet As at April 3, 2010 and December 31, 2009 (Expressed in thousands of U.S. dollars) (Unaudited) ---------------------------------------------- April December 3, 31, 2010 2009 $ $ Assets Current assets Cash and cash equivalents 22,340 20,723 Accounts receivable 118,967 94,241 Inventories 172,051 178,140 Prepaid expenses and other current assets 11,440 10,813 Current income taxes recoverable 37 442 Deferred income taxes 5,457 5,457 ------- -------- 330,292 309,816 Property, plant and equipment 114,699 113,245 Goodwill 50,270 49,717 Intangible assets 58,750 60,902 Deferred income taxes 14,661 14,734 Other assets 2,470 2,876 ------- -------- 571,142 551,290 ======= ======== Liabilities Current liabilities Bank indebtedness 85,844 63,481 Accounts payable and accrued liabilities 94,457 106,253 Customer and other deposits 3,981 1,436 Other current liabilities 2,447 1,566 Current portion of long-term debt 67,218 52,455 Current portion of long-term liabilities 181 712 ------- -------- 254,128 225,903 Long-term debt 18,775 34,734 Long-term liabilities 3,326 3,247 Deferred income taxes 13,413 12,708 ------- -------- 289,642 276,592 Preferred shares of a subsidiary company 28,288 28,187 Equity SunOpta Inc. Shareholders' Equity Capital stock 178,901 178,694 65,065,907 common shares (December 31, 2009 -- 64,982,968) Additional paid in capital 8,734 7,934 Retained earnings 38,759 34,146 Accumulated other comprehensive income 13,116 12,079 ------- -------- Total SunOpta Inc. Shareholders' Equity 239,510 232,853 Non-controlling interest 13,702 13,658 ------- -------- Total Equity 253,212 246,511 ------- -------- 571,142 551,290 ======= ======== SunOpta Inc. Condensed Consolidated Statements of Cash Flow For the quarters ended April 3, 2010 and March 31, 2009 (Expressed in thousands of U.S. dollars) (Unaudited) ----------------------------------------------------------- March April 3, 31, 2010 2009 $ $ Cash provided by (used in) Operating activities Earnings (loss) for the period 4,641 (1,979) Items not affecting cash Amortization 4,972 4,731 Stock-based compensation 800 253 Unrealized gain on foreign exchange (1,092) (525) Deferred income taxes 1,290 (1,798) Other 889 (728) Changes in non-cash working capital, net of businesses acquired (25,835) (4,474) -------- -------- (14,335) (4,520) -------- -------- Investing activities Increase in short-term investments -- (16,500) Purchases of property, plant and equipment, net (6,312) (4,588) Payment of deferred purchase consideration (500) (500) Purchase of patents, trademarks and other intangible assets (42) (64) Other 296 50 -------- -------- (6,558) (21,602) -------- -------- Financing activities Increase in line of credit facilities 23,386 12,002 Repayment of long-term debt (1,102) (4,019) Borrowings under long-term debt -- 716 Proceeds from the issuance of common shares 207 198 Other (188) 69 -------- -------- 22,303 8,966 -------- -------- Foreign exchange gain (loss) on cash held in a foreign currency 207 (194) -------- -------- Increase (decrease) in cash and cash equivalents during the period 1,617 (17,350) Cash and cash equivalents -- beginning of the period 20,723 24,755 -------- -------- Cash and cash equivalents -- end of the period 22,340 7,405 ======== ======== SunOpta Inc. Segmented Information For the quarters ended April 3, 2010 and March 31, 2009 (Expressed in thousands of U.S. dollars) (Unaudited) ----------------------------------------------------------------------------------------------------------------- Quarter ended April 3, 2010 -------------------------------------------------------------------- SunOpta SunOpta Corporate Foods Opta Minerals BioProcess Consolidated $ $ $ $ $ -------------- ------------- ---------- --------- -------------- Total revenues from external customers 247,547 17,931 622 -- 266,100 -------------- ------------- ---------- --------- -------------- Segment Operating Income 12,528 1,713 (497) (3,023) 10,721 -------------- ------------- ---------- --------- -------------- SunOpta Foods has the following segmented reporting: ---------------------------------------------------------------------------------------- Quarter ended April 3, 2010 ---------------------------------------------------------------------------------------- Grains Distribution SunOpta and Foods Ingredients Fruit Group IST Foods $ $ $ $ $ $ ------------- ------------- ------------- ------------- ------------ -------------- Total revenues from external customers 78,845 18,150 43,300 41,325 65,927 247,547 ------------- ------------- ------------- ------------- ------------ -------------- Segment Operating Income 5,016 4,212 1,855 1,642 (197) 12,528 ------------- ------------- ------------- ------------- ------------ -------------- -------------------------------------------------------------------- Quarter ended March 31, 2009 -------------------------------------------------------------------- SunOpta SunOpta Corporate Foods Opta Minerals BioProcess Consolidated $ $ $ $ $ -------------- ------------- ---------- --------- -------------- Total revenues from external customers 217,336 14,725 13 -- 232,074 -------------- ------------- ---------- --------- -------------- Segment Operating Income 2,746 (752) (758) (1,596) (360) -------------- ------------- ---------- --------- -------------- SunOpta Foods has the following segmented reporting: ----------------------------------------------------------------------------------------- Quarter ended March 31, 2009 ----------------------------------------------------------------------------------------- Grains Distribution SunOpta and Foods Ingredients Fruit Group IST Foods $ $ $ $ $ $ ------------- ------------- ------------- ------------- ------------- -------------- Total revenues from external customers 74,339 13,540 37,602 35,183 56,672 217,336 ------------- ------------- ------------- ------------- ------------- -------------- Segment Operating Income 3,935 822 (1,157) (1,172) 318 2,746 ------------- ------------- ------------- ------------- ------------- -------------- (Segment Operating Income is defined as "Earnings before the following" excluding the impact of "other expense (income), net") CONTACT: SunOpta Inc. Steve Bromley, President & CEO Eric Davis, Vice President & CFO Tony Tavares, Chief Operating Officer Susan Wiekenkamp, Information Officer 905-455-2528, ext 103 susan.wiekenkamp@sunopta.com www.sunopta.com