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Press release from GlobeNewswire (a Nasdaq OMX company)

SunOpta Announces Second Quarter 2011 Results

Tuesday, August 09, 2011

SunOpta Announces Second Quarter 2011 Results14:00 EDT Tuesday, August 09, 2011TORONTO, Aug. 9, 2011 (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 and two quarters ended July 2, 2011. All amounts are expressed in U.S. dollars and results are reported in accordance with U.S. GAAP, except where specifically noted. For the quarter ended July 2, 2011 the Company realized quarterly revenues of $290.8 million versus revenues of $233.9 million for the quarter ended July 3, 2010, an increase of 24.3%. This represents the largest quarterly revenues from continuing operations in the Company's history, and reflects continued growth in the natural and organic foods sectors. Revenues increased 13.2% excluding the impact of the acquisitions completed late in 2010. For the quarter ended July 2, 2011 the Company reported earnings per diluted common share from continuing operations of $0.07, or $4.4 million, as compared to $0.09, or $6.2 million, for the quarter ended July 3, 2010. The Company experienced continued strong performance in the International Foods Group and Opta Minerals Inc. offset by reduced earnings in the Grains and Foods Group primarily due to commodity market pressures in the sunflower segment, reduced earnings in the Ingredients Group due mainly to the loss of a major customer earlier in the year, and higher income taxes.  Earnings for the quarter ended July 2, 2011 reflect an income tax rate of 42.2%. The income tax rate is expected to normalize over the balance of the year to an annualized tax rate of approximately 36% due to the expected realization of certain tax benefits in the third and fourth quarter of 2011. The quarterly results include other pre-tax income of approximately $3.2 million, due primarily to gains on the sale of assets in the Fruit Group during the quarter. These gains were offset by additional pre-tax costs of approximately $3.4 million included within the segmented results related to the Fruit Group disposals and other legal and rationalization matters.        For the quarter ended July 2, 2011 the Company realized EBITDA1 of $12.9 million compared to $15.8 million for the quarter ended July 3, 2010. For the two quarters ended July 2, 2011 the Company reported revenues of $551.7 million versus revenues of $450.6 million for the two quarters ended July 3, 2010, a year over year increase of 22.4%. Revenues increased 11.6% excluding the impact of the acquisitions completed late in 2010. For the two quarters ended July 2, 2011 the Company realized earnings per diluted common share from continuing operations of $0.14, or $9.5 million, as compared to $0.16, or $10.4 million, for the two quarters ended July 3, 2010.  For the two quarters ended July 2, 2011 the Company realized EBITDA1 of $28.8 million as compared to $29.8 million for the two quarters ended July 3, 2010. At July 2, 2011, the Company's balance sheet reflects a current working capital ratio of 1.47 to 1.00, long-term debt to equity ratio of 0.20 to 1.00 and total debt to equity ratio of 0.55 to 1.00.  For the quarter ended July 2, 2011 the Company generated cash from continuing operating activities of $20.5 million as compared to $18.6 million for the quarter ended July 3, 2010. At the end of the quarter the Company had total debt outstanding of $167.8 million, a decrease of $17.8 million from the period ended April 2, 2011. At July 2, 2011 the Company had total assets of $631.4 million and a net book value of $4.65 per outstanding share. At July 2, 2011, the Company was in compliance with all its debt covenants.  Steve Bromley, President and Chief Executive Officer of SunOpta, commented, "Our results for the second quarter reflect record quarterly revenues from continuing operations for the Company and continued growth in the natural and organic foods categories where we operate. Although we are working through a difficult commodity environment at this time, especially in our sunflower business, we continue to believe in our core portfolio and are focused on a number of new initiatives and opportunities that are currently in the pipeline. We remain committed to expanding our business in fast growing healthy foods categories while at the same time improving operating margins and returns on assets employed. We believe we are well positioned in the natural and organic foods sector and are confident in our future prospects." The Company plans to host a conference call at 10:00 A.M. Eastern Time on Wednesday, August 10th, 2011 to discuss the second quarter 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 August 10th and 17th with the toll free dial-in number 1-800-642-1687 or 706-645-9291 followed by pass code: 74437112#.1See discussion of non-GAAP financial measures following the consolidated financial information below.About SunOpta Inc. SunOpta Inc. is a leading global company focused on natural, organic and specialty foods. 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 significant 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 66.4% ownership position in Opta Minerals Inc. (TSX:OPM), 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=3958Forward-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. These forward-looking statements include, but are not limited to, our expectations about future income tax rates, our continued efforts to streamline our portfolio, our focus on growing our business and improving operating margins and returns on assets employed and our positioning in the natural and organic foods sector. The terms and phrases "continue," "believe," "expect," "confident," "enthusiastic," "improving," "remain focused," "positioned," 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 predictions 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.SunOpta Inc.       Consolidated Statements of Operations        For the quarter ended July 2, 2011 and July 3, 2010       Unaudited       (Expressed in thousands of U.S. dollars, except per share amounts)                Quarter ended July 2, 2011 $ Quarter ended July 3, 2010 $ Change %        Revenues 290,757   233,885  24.3%       Cost of goods sold 257,055   196,942  30.5%       Gross profit  33,702   36,943  (8.8)%        Selling, general and administrative expenses 24,330   24,224  0.4% Intangible asset amortization 1,393   1,144  21.8% Other (income) expense, net (3,189)  1,044  (405.5)% Foreign exchange gain(57) (319) 82.1%       Earnings from continuing operations before the following 11,225  10,850  3.5%        Interest expense, net 2,520   2,567  (1.8)%       Earnings from continuing operations before income taxes8,705  8,283  5.1%       Provision for income taxes3,672  1,854  98.1%       Earnings from continuing operations5,033  6,429  (21.7)%       Discontinued operations      Earnings from discontinued operations, net of taxes --  414  (100.0)%Gain on sale of discontinued operations, net of taxes --   13,809  (100.0)%      Earnings from discontinued operations, net of taxes --  14,223  (100.0)%      Earnings5,033  20,652  (75.6)%        Earnings attributable to non-controlling interests632  186  239.8%       Earnings attributable to SunOpta Inc.4,401  20,466  (78.5)%       Earnings per share - basic       -from continuing operations0.07  0.09    -from discontinued operations --  0.22      0.07  0.31           Earnings per share - diluted        -from continuing operations0.07  0.09    -from discontinued operations--  0.22      0.07  0.31           SunOpta Inc.       Consolidated Statements of Operations        For the two quarters ended July 2, 2011 and July 3, 2010       Unaudited       (Expressed in thousands of U.S. dollars, except per share amounts)                Two quarters ended July 2, 2011 $ Two quarters ended July 3, 2010 $ Change %        Revenues 551,680   450,634  22.4%       Cost of goods sold  482,423   378,215  27.6%       Gross profit 69,257   72,419  (4.4)%        Selling, general and administrative expenses 47,337   50,020  (5.4)% Intangible asset amortization 2,778   2,319  19.8% Other (income) expense, net (2,827)  1,359  (308.0)% Foreign exchange loss (gain) 78  (1,436) 105.4%       Earnings from continuing operations before the following  21,891   20,157  8.6%        Interest expense, net 4,504   5,589  (19.4)%       Earnings from continuing operations before income taxes 17,387  14,568  19.4%       Provision for income taxes 6,681  3,930  70.0%       Earnings from continuing operations 10,706  10,638  0.6%       Discontinued operations       Earnings from discontinued operations, net of income taxes --  846  (100.0)%Gain on sale of discontinued operations, net of income taxes --  13,809  (100.0)%      Earnings from discontinued operations, net of income taxes --  14,655  (100.0)%      Earnings10,706  25,293  (57.7)%        Earnings attributable to non-controlling interests1,224  214  472.0%     Earnings attributable to SunOpta Inc.9,482  25,079  (62.2)%       Earnings per share – basic      -from continuing operations 0.14  0.16   -from discontinued operations --  0.23      0.14  0.39           Earnings per share – diluted       -from continuing operations 0.14  0.16   -from discontinued operations --  0.22      0.14  0.38         SunOpta Inc.     Consolidated Balance Sheets     As at July 2, 2011 and January 1, 2011     Unaudited     (Expressed in thousands of U.S. dollars, except per share amounts)            July 2, 2011 $ January 1, 2011 $      Assets           Current assets     Cash and cash equivalents  5,573  2,643  Accounts receivable 116,116  98,875  Inventories  208,946  200,278  Prepaid expenses and other current assets 24,899  30,041  Deferred income taxes 624  870   356,158  332,707      Investments  33,345   33,345 Property, plant and equipment 119,186   116,249 Goodwill  49,251   48,558 Intangible assets 59,300   60,200 Deferred income taxes 11,940   11,889 Other assets 2,219   2,930 Non-current assets held for sale  --   3,806         631,399  609,684      Liabilities         Current liabilities    Bank indebtedness  107,258  75,910  Accounts payable and accrued liabilities 105,814  124,031  Customer and other deposits 2,076  2,858  Income taxes payable 1,682  973  Other current liabilities 1,582  7,674  Current portion of long-term debt  22,826  22,247  Current portion of long-term liabilities 582  571   241,820  234,264      Long-term debt  37,689   42,735 Long-term liabilities 5,920   6,642 Deferred income taxes 24,591   20,808    310,020  304,449           Equity    SunOpta Inc. shareholders' equity   Capital Stock  181,489  180,661  65,683,807 common shares (January 1, 2011 - 65,500,091)   Additional paid in capital  13,236  12,336 Retained earnings 104,694  95,212 Accumulated other comprehensive income 6,306  2,833    305,725   291,042 Non-controlling interest 15,654  14,193 Total equity 321,379   305,235         631,399   609,684             SunOpta Inc.     Consolidated Statements of Cash Flows     For the quarter ended July 2, 2011 and July 3, 2010     Unaudited     (Expressed in thousands of U.S. dollars, except per share amounts)            Quarter ended July 2, 2011 $ Quarter ended July 3, 2010 $      Cash provided by (used in)          Operating activities    Earnings 5,033   20,652  Earnings from discontinued operations --   14,223  Earnings from continuing operations 5,033   6,429       Items not affecting cash    Depreciation and amortization 4,863   3,912  Unrealized loss (gain) on foreign exchange 246  (326) Deferred income taxes 2,212   482  Stock-based compensation 552   800  Gain on sale of property, plant and equipment(3,824)  --  Unrealized (gain) loss on derivative instruments(233)  955  Other 248   763  Changes in non-cash working capital  11,384   5,547  Net cash flows from operations - continuing operations 20,481   18,562  Net cash flows from operations - discontinued operations --  (2,552)   20,481   16,010 Investing activities    Purchases of property, plant and equipment(5,312) (2,880) Proceeds from sale of property, plant and equipment 2,773   --  Payment of deferred purchase consideration --  (221) Purchases of patents, trademarks and other intangible assets(9) (333) Other(441) (131) Cash flows from investing activities - continuing operations(2,989) (3,565) Cash flows from investing activities - discontinued operations --   65,156   (2,989)  61,591 Financing activities    Decrease in line of credit facilities(14,124) (58,182) Borrowings under long-term debt --   247  Proceeds from the issuance of common shares 534   305  Repayment of long-term debt(4,722) (3,067) Other 632  (55) Cash flows from financing activities - continuing operations(17,680) (60,752)      Foreign exchange gain (loss) on cash held in a foreign currency 41  (834)      (Decrease) increase in cash and cash equivalents during the period(147)  16,015       Discontinued operations cash activity included above:    Add: Balance included at beginning of period --   20,135  Less: Balance included at end of period --  (17,974)      Cash and cash equivalents - beginning of the period 5,720   2,205       Cash and cash equivalents - end of the period 5,573   20,381             SunOpta Inc.     Consolidated Statements of Cash Flows     For the two quarters ended July 2, 2011 and July 3, 2010     Unaudited     (Expressed in thousands of U.S. dollars, except per share amounts)            Two quarters ended July 2, 2011 $ Two quarters ended July 3, 2010 $      Cash provided by (used in)          Operating activities    Earnings 10,706   25,293  Earnings from discontinued operations --   14,655  Earnings from continuing operations 10,706   10,638       Items not affecting cash    Depreciation and amortization 9,696   8,240  Unrealized loss (gain) on foreign exchange 969  (1,418) Deferred income taxes 3,978   1,648  Stock-based compensation 981   1,420  Gain on sale of property, plant and equipment(3,824)  --  Unrealized (gain) loss on derivative instruments(3,918)  1,009  Other(66)  1,248  Changes in non-cash working capital (31,944) (17,807) Net cash flows from operations - continuing operations(13,422)  4,978  Net cash flows from operations - discontinued operations --  (3,303)  (13,422)  1,675 Investing activities    Purchases of property, plant and equipment(9,221) (8,831) Proceeds from sale of property, plant and equipment 2,773   --  Payment of deferred purchase consideration --  (721) Purchases of patents, trademarks and other intangible assets(90) (363) Other(441)  165  Cash from investing activities - continuing operations(6,979) (9,750) Cash from investing activities - discontinued operations --   64,783   (6,979)  55,033 Financing activities    Increase (decrease) in line of credit facilities 28,427  (34,796) Borrowings under long-term debt 37   247  Proceeds from the issuance of common shares 747   512  Repayment of long-term debt(6,726) (4,169) Financing costs(120)  --  Other 755  (243) Cash from financing activities - continuing operations 23,120  (38,449)      Foreign exchange gain (loss) on cash held in a foreign currency 211  (627)            Increase in cash and cash equivalents during the period 2,930   17,632       Discontinued operations cash activity included above:    Add: Balance included at beginning of period --   18,971  Less: Balance included at end of period --  (17,974)      Cash and cash equivalents - beginning of the period 2,643   1,752       Cash and cash equivalents - end of the period 5,573   20,381                         SunOpta Inc.           Segmented Information           For the quarter ended July 2, 2011 and July 3, 2010           Unaudited           (Expressed in thousands of U.S. dollars)            Quarter endedJuly 2, 2011   SunOpta Foods $ Opta Minerals $ Corporate Services $ Consolidated $ Total revenues from external customers 265,970  24,787  --  290,757 Segment Operating Income 7,857  2,159 (1,980) 8,036              SunOpta Foods has the following segmented reporting for the quarter ended July 2, 2011:            Quarter endedJuly 2, 2011   Grains and Foods Group $ Ingredients Group $ Fruit Group $ International Foods Group $ SunOpta Foods $ Total revenues from external customers 125,312  13,924  41,677  85,057  265,970 Segment Operating Income 4,654  899 (217) 2,521  7,857                Quarter ended July 3, 2010   SunOpta Foods $ Opta Minerals $ Corporate Services $ Consolidated $ Total revenues from external customers  212,744   21,141   --   233,885 Segment Operating Income  12,824   1,719  (2,649)  11,894              SunOpta Foods has the following segmented reporting for the quarter ended July 3, 2010:             Quarter ended July 3, 2010   Grains and Foods Group $ Ingredients Group $ Fruit Group $ International Foods Group $ SunOpta Foods $ Total revenues from external customers  92,088   17,648   39,531   63,477   212,744 Segment Operating Income  7,188   3,006   1,404   1,226   12,824             SunOpta Inc.           Segmented Information           For the two quarters ended July 2, 2011 and July 3, 2010           Unaudited           (Expressed in thousands of U.S. dollars)                      Two quarters endedJuly 2, 2011   SunOpta Foods $ Opta Minerals $ Corporate Services $ Consolidated $ Total revenues from external customers 505,287  46,393  --  551,680 Segment Operating Income (Loss) 18,320  4,610 (3,866) 19,064              SunOpta Foods has the following segmented reporting for the two quarters ended July 2, 2011:                      Two quarters endedJuly 2, 2011   Grains and Foods Group $ Ingredients Group $ Fruit Group $ International Foods Group $ SunOpta Foods $ Total revenues from external customers 240,913  29,675  78,687  156,012  505,287 Segment Operating Income 10,361  2,794  171  4,994  18,320              Two quarters ended July 3, 2010   SunOpta Foods $ Opta Minerals $ Corporate Services $ Consolidated $ Total revenues from external customers  411,562   39,072   --   450,634 Segment Operating Income (Loss)  24,215   3,432  (6,131)  21,516              SunOpta Foods has the following segmented reporting for the two quarters ended July 3, 2010:                       Two quarters ended July 3, 2010   Grains and Foods Group $ Ingredients Group $ Fruit Group $ International Foods Group $ SunOpta Foods $ Total revenues from external customers  170,933   35,798   79,871   124,960   411,562 Segment Operating Income  12,204   7,218   3,268   1,525   24,215 1Non-GAAP Financial Measures In addition to reporting financial results in accordance with U.S. generally accepted accounting principles ("GAAP"), the Company provides information regarding Earnings before interest, taxes, depreciation and amortization ("EBITDA") as additional information about its operating results, which is not a financial measure calculated and presented in accordance with GAAP. The Company believes that EBITDA assists 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. EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP.  The Company defines EBITDA as "earnings from continuing operations plus provision for income taxes, interest expense, depreciation and amortization."  The following is a tabular presentation of EBITDA, including reconciliation to GAAP earnings, which the Company believes to be the most directly comparable GAAP financial measure.              Quarter ended July 2, 2011 $ Quarter ended July 3, 2010 $      Earnings from continuing operations 5,033   6,429       Provision for income taxes 3,672   1,854  Interest expense, net 2,520   2,567  Other (income) expense, net(3,189)  1,044  Depreciation and amortization 4,863   3,912  Earnings before interest, taxes, depreciation and amortization (EBITDA) 12,899   15,806               Two quarters ended July 2, 2011 $ Two quarters ended July 3, 2010 $      Earnings from continuing operations 10,706   10,638       Provision for income taxes 6,681   3,930  Interest expense, net 4,504   5,589  Other (income) expense, net(2,827)  1,359  Depreciation and amortization 9,696   8,240  Earnings before interest, taxes, depreciation and amortization (EBITDA) 28,760   29,756 CONTACT: SunOpta Inc. Steve Bromley, President & CEO Tony Tavares, Vice President & COO Susan Wiekenkamp, Information Officer Tel: 905-455-2528, ext 103 susan.wiekenkamp@sunopta.com Website: www.sunopta.com